Mumbai: The rupee eased on Monday on concerns foreign investors could repatriate capital into the end of the year, and the dollar’s gains versus the yen also put downward pressure on the currency.
The partially convertible rupee ended at 46.7050/7150 per dollar, about 0.4% weaker than its previous close of 46.53/54. It traded in the range of 46.5875 and 46.75 during the session. “Trade was mostly driven on the stockmarket and how the dollar moved against other currencies like pound sterling, euro and yen,” said Paresh Nayar, head of foreign exchange and money markets at First Rand Bank.
“I don’t think interest rates would have an impact on inflows. The market has already discounted a 25 basis point hike in the CRR (cash reserve ratio),” he added, referring to banks’ reserve requirement, which is at 5% now.
The BSE 30-share index Sensex ended 0.1% lower, after rising as much as 0.9% in morning trade after Dubai secured some funding from Abu Dhabi.
According to data from Nomura, foreign funds have bought $16.5 billion of Indian equities so far this year.
That has helped the stock market rise nearly 80% in 2009 and lifted the rupee of a record low of 52.2 per dollar hit in early March, but currency traders are concerned foreign investors may realize profits and repatriate the funds as the year ends.
A higher-than-forecast November inflation reading hardened expectations the Reserve Bank of India (RBI) may tighten banks’ reserve requirements in coming weeks and raise rates early next year.
One-month offshore non-deliverable forward contracts for the rupee were quoted at 46.66/76, little changed from the onshore spot rate.
In currency futures, the most traded near-month contracts on the National Stock Exchange and MCX-SX were at 46.75, from Friday’s 46.61 and 46.6125 respectively.