Rupee eases on weak stocks, record oil

Rupee eases on weak stocks, record oil

Mumbai: Rupee eased on Wednesday as weak stock markets raised concerns about fund outflows, while record oil prices made sentiment cautious.

At 10 am, the partially convertible rupee was at 39.38/39 per dollar, weaker from the previous close of 39.355/365 — and further away from 39.16, its highest in nearly 10 years, hit earlier this month.

India’s main share index fell more than 1% in early trade, tracking a slide across the region on concerns of slower growth in the United States.

“It has sparked concern about flow of funds to emerging economies, should the US go into a recession," a trader with a state-run bank, said.

Capital flows into shares have been a key driver for the rupee in recent months. But foreigners have sold about $135 million worth of Indian shares this month, after buying a net $5.1 billion in October.

“Outflows from the stock market could continue in the near term," a trader with a foreign bank, said.

Traders anticipated crude refiners to step up dollar purchases in the coming days, after oil came just shy of $100 a barrel on Wednesday.

Oil is India’s biggest import and high crude price raise the risk of widening the trade deficit, which was $64.9 billion in 2006/07.