Mumbai: The rupee fell to its lowest in almost a month on Wednesday, after the euro’s fall from a seven-week peak triggered by dollar demand from importers and a weakness in global stock markets underpinned sentiment.
The partially convertible rupee ended at 47.0150/0250 per dollar, off an intraday low of 47.1550, weakest since 9 June and about 0.3% lower than Tuesday’s close of 46.89/90. “A shaky euro pushed the rupee lower as there was uncertainty whether it would stay at the current peak levels,” said a senior dealer with a foreign bank in Mumbai. He expects the rupee to trade in a range of 46.90 to 47.10 a dollar on Thursday.
The euro slipped off seven-week highs against the dollar on concerns about the global economic recovery and as investors scrutinized details of plans to test the financial health of European banks.
A European committee of bank supervisors will outline on Wednesday the methodology for stress tests of about 100 banks but German banking sources said the test would exclude a haircut on German sovereign bonds.
Lower share prices also hit sentiment, traders said. The BSE benchmark share index Sensex fell 0.8%, hurt by weaker global markets, concerns on recovery in the US economy and nervousness about the European banking stress test. Foreign funds have bought around $6.8 billion worth of Indian equities so far in 2010, after pumping in $17.5 billion in 2009.
Dealers said a few foreign banks were buying dollars cheaper locally to sell at a higher rate in the offshore non-deliverable forward (NDF) market.
The one-month offshore non-deliverable forward contracts were quoted at 47.25/35, higher than the one-month onshore forward rate of 47.22 at close of trade.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX ended at 47.1875 and 47.19 respectively. The total traded volume on the two exchanges at about $6.1 billion.