Mumbai: The rupee weakened to an all-time low of 51 per dollar in afternoon trade on Friday, weighed down by heavy dollar demand from importers to meet month-end commitments and losses in local shares.
At 12:34pm, the partially convertible rupee had recovered slightly to Rs50.87/88, having been lifted off a low of Rs51.00 by buying from state-run banks which dealers said was likely to have been on behalf of the Reserve Bank of India.
On Thursday, the rupee had closed at Rs50.45/47.
“The market is one-sided, there is heavy dollar demand from oil refiners and the non-deliverable forward rates are also higher, so there is some arbitrage opportunity as well,” said Sudarshana Bhat, chief dealer at state-run Corporation Bank.
He said there was support for the dollar-rupee at Rs50.50 and resistance around Rs50.70.
Other dealers said they expected the Reserve Bank of India to intervene by selling dollars to cap any sharp fall in the rupee.
One-month offshore non-deliverable forward contracts were quoting at Rs50.97/51.07, weaker than the onshore spot rate.
Banks generally buy dollars locally and sell them in the offshore market to profit from the difference in the two prices, weakening the rupee in the local market.
Stocks would be watched for direction, dealers said.
The main stock index fell 2% in afternoon trade on a slower than expected December quarter economic growth.
Foreigners have dumped about $1.6 billion worth of Indian shares in 2009, after having sold more than $13 billion last year when the rupee fell 19.1%.