Mumbai: The rupee gave up early gains and dropped for a second straight session on Wednesday as local shares tumbled from early highs and as a steady dollar failed to provide any clear direction.
The partially convertible rupee closed at 48.52/53 per dollar, 0.2% weaker than Tuesday’s close of 48.42/43.
“The reversal in the stock market caught people off guard, and the break above 48.45 triggered stop-loss buying. Looks like we are correcting the 49.40-48.20 move,” a senior dealer with a private bank said.
Indian shares rose 2% in morning deals, but then a weak start to European markets sparked selling that saw the market close down 1.5%.
Foreigners have bought about $6.4 billion of stocks this year, helping the rupee recover from March’s record low of 52.20. But the rupee has fallen 1.3% in July despite foreigners buying a net $1.3 billion of stocks.
One-month offshore non-deliverable forward contracts traded in Singapore were quoted at 48.53/63, largely steady compared with the onshore spot closing rate. In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at 48.5450 and 48.5550, respectively, with the total traded volume on the two exchanges at about $1.5 billion.