Mumbai: Rupee extended losses in late afternoon trade on Wednesday weighed by broad gains in the dollar versus major currencies, while a subdued domestic sharemarket also dented hopes for more foreign fund inflows.
At 4:15 pm, the partially convertible rupee was at Rs 45.43/44 per dollar, weaker than Rs 44.945/955 at close on Tuesday, when it had hit Rs 44.94, its strongest since 8 December.
“Dollar has further extended gains versus majors, so the rupee drop is in line with that,” a senior dealer with a foreign bank said. The dollar index against six major currencies was up 0.6% at 79.812 points.
At 10:35 am, the partially convertible rupee was at Rs 45.25/26 per dollar, weaker than 44.945/955 at close on Tuesday, when it had risen to 44.94 -- its strongest since 8 December.
“Asian currencies like the Korean won are a bit weaker. Dollar too in general has strengthened a tad since last evening and equity markets are a bit nervous as foreign funds have been selling this month,” said Ananth Narayan G., head of fixed income, currencies and commodities at Standard Chartered Bank.
“I think rupee would remain subdued till end of year. Think Q1 2011 will be good for the rupee though - typically trade deficit is low in Q1, plus we could have a few initial public offerings boosting capital flows.”
The dollar rose against other major currencies on Wednesday after upbeat US economic data helped to send US yields higher, although thinning volumes into the year-end meant trading was choppy.
The index of the dollar against six major currencies was up 0.24% at 79.554 points.
Traders expect the rupee to trade in a broad range of 45.15-45.30 intra-day.
Indian shares dropped 0.3%, tracking mostly weak Asian markets, as investors consolidated positions after the main index rose for three straight days.
Foreign funds had dumped a net $842.75 million worth of shares last week and sold another $52.5 million on Monday. However, total foreign fund inflows so far in 2010 still stand at $28.4 billion, on top of the $17.5 billion purchased last year.
One-month offshore non-deliverable forward contracts were quoted at 45.56, weaker compared to the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock exchange were at 45.34, with the total traded volume on the three exchanges at about $1.3 billion.