Mumbai: The Indian rupee weakened on 19 June on the back of falling stocks, but dealers said expectations the central bank would intervene kept the unit from breaking past 43 per dollar.
At 10:10 a.m, the partially convertible rupee was at 42.93/94, 0.1% down from Wednesday’s close of 42.895/905. It had hit a 13-month low of 43.21 on 22 May.
“The rupee is weaker because of high oil prices and a weak stock market but there doesn’t seem to be any conviction in the market to break the 42.85 to 42.95 range,” a dealer with a private bank said.
Traders said they expected the central bank to intervene and protect the rupee from falling to 43, as it has been seen doing whenever the rupee tried to inch close to that level in recent days.
India’s main share index was down 1.5% in early deals after having fallen 1.75% on 18 June, taking its losses this year to nearly a quarter.
Foreigners bought $92 million of stocks on 17 June, but they are net sellers of $5.7 billion so far in 2008, helping push the rupee down more than 8%.
Last year the rupee had gained more than 12% when foreign funds bought a record $17.4 billion of shares as the stock market rose 47%.
High oil prices have been hurting sentiment for the rupee as India imports nearly 70% of its crude. Oil was trading close to $136 a barrel and high prices widen the country’s trade deficit.
One-month offshore non-deliverables forward contracts were at 43.04/43.14, weaker than the onshore rate.