Rupee finishes second weekly loss on outflows

Rupee finishes second weekly loss on outflows
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First Published: Fri, Nov 21 2008. 11 00 PM IST
Updated: Fri, Nov 21 2008. 11 00 PM IST
Mumbai: The rupee completed a second weekly loss as a slide in global stocks fuelled concern that investors will step up equity sales.
All 10 most-active currencies in Asia outside Japan fell this week as Singapore and Taiwan forecast further contraction of their economies. India’s benchmark stock index had a second weekly decline as global funds dumped more local shares than they bought for a sixth day.
“The rupee still faces some risks in the short term, mainly due to global uncertainties,” said Vikas Agarwal, a currency and interest-rate strategist in Mumbai at JPMorgan Chase & Co. “Volatility remains high across asset markets.”
The rupee weakened 2% to 50.025 a dollar at the 5pm close in Mumbai, according to data compiled by Bloomberg. It touched an all-time low of 50.5925 on Thursday. The rupee pared losses on speculation that the central bank sought to limit declines by selling dollars.
Investors based abroad pulled a record $4.27 billion out of India’s equity and debt markets last month as the credit crisis escalated following the collapse of Lehman Brothers Holdings Inc. in September.
Offshore forward contracts showed traders increased bets for how far the rupee will weaken in the next month. Non-deliverable contracts showed an implied rate of 51.05 rupees to the dollar, versus 49.53 a week ago.
Forwards are agreements in which assets are bought and sold at current prices for future delivery. Indian rupee forwards traded overseas are non-deliverable, meaning they are settled in dollars rather than the local currency.
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First Published: Fri, Nov 21 2008. 11 00 PM IST
More Topics: Rupee | Loss | Global stocks | Investors | Economies |