Mumbai: The rupee pared early losses on Wednesday as exporters cashed in their earnings as the Indian unit fell sharply after foreign funds cut their exposure in local assets amid a bout of global risk aversion, dealers said.
At 10 am, the partially convertible rupee was at 39.595/605 per dollar, climbing off an early low of 39.6750, its weakest since 22 January. It ended at 39.555/565 on Tuesday.
“Exporters are helping the rupee. Every time it weakens past a certain point, they come in and sell their dollar holdings,” said a dealer with a foreign bank.
The benchmark share index fell nearly 4% in early trade, taking direction from a slide across the region.
Asian stocks fell sharply, sending investors fleeing to less risky bonds, after unexpectedly weak service sector data in the United States and Europe fueled fears of a recession.
The Japanese yen rose across the board as a steep sell-off in equity markets hurt risk appetite, prompting investors to unwind carry trades.
Yen carry trades refer to deals in which the low-yielding Japanese currency is used to fund purchases of assets with higher yields elsewhere.
Earlier this month, Reliance Power, a unit of Anil Dhirubhai Ambani’s group, raised a record $3 billion through an initial share sale that generated sizable foreign interest, and dealers said rebates worth $2.5 billion have left India so far.