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Business News/ Opinion / Online-views/  Rupee off 35-month high as euro retreats, shares fall
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Rupee off 35-month high as euro retreats, shares fall

Rupee off 35-month high as euro retreats, shares fall

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Mumbai: The rupee eased from the 35-month high touched earlier on Wednesday as the euro retreated and local shares stayed in the negative territory.

At 1:27pm, the partially convertible rupee was at 44.01/02 per dollar, after hitting 43.8550, its highest since 29 August, 2008, but the unit was stronger from Tuesday’s close of 44.1750/1850.

The euro was at $1.4473 after touching a high of $1.4536 earlier. It had been $1.4480 when the local foreign exchange market closed on Tuesday.

The index of the dollar against six major currencies was up 0.13% at 73.566 points, compared with 73.650 points at the end of domestic currency market on Tuesday.

The Reserve Bank stunned investors on Tuesday by raising interest rates by 50 basis points, showing unexpected resolve in fighting persistently high inflation despite slowing growth in Asia’s third-largest economy and uncertainty about global demand.

While the increase, the 11th since March 2010, dented the outlook for shares, traders are betting foreign funds will move into bonds and deposits lured by better yields.

Shares were subdued in choppy trade, with rate-sensitive sectors such as banks and automakers among the losers.

Traders said the rupee could face resistance at 43.80, as importers are likely to buy dollars around that level.

The dollar sank to a three-month low against a basket of major currencies on Wednesday as markets fretted about the prospect of a U.S. debt default and downgrade, while they cautiously waited to see if Japan would intervene to weaken the yen.

The index of the dollar against six major currencies was down 0.05 percent at 73.438 points, and below 73.650 points when the rupee closed on Tuesday. The euro was trading at $1.4523, compared with $1.4480 previously.

The one-month onshore forward premium was at 24.50 points from 25.25 on Tuesday, while the three-month was at 75.50 points from 74.25 and the one-year was at 248.50 points versus 246.50.

One-month offshore non-deliverable forward contracts were quoted at 43.89, weaker than the onshore spot rate.

In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 43.8850. The total volume stood at $9.6 billion.

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Published: 27 Jul 2011, 01:49 PM IST
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