Rupee dips to 2-week low on oil buys, stocks

Rupee dips to 2-week low on oil buys, stocks

Mumbai: The rupee slipped beyond Rs49 per US dollar to a two-week low on Wednesday, falling for a fourth consecutive session, as refiners stepped up their dollar purchases to pay for oil imports.

A shaky stock market, which fell 1% in early trade after losing 4.1% in the previous two days, also added to the downward pressure on the rupee.

At 10:18am, the partially convertible rupee was at Rs49.08/10 per US dollar, 0.6 % weaker than Tuesday’s close of Rs48.78/81.

A senior dealer at a foreign bank said Rs49.35 was a strong resistance point as many stop-losses were bunched up around that level and a clean break beyond those levels would push the rupee down to 50.

Financial markets are shut on Thursday for Christmas and many foreign banks have winded down their trading positions ahead of the year-end and only a handful of private and state-run banks were active in the market.

The country’s exports shrank an annual 12.1% in October, its first year-on-year decline in nearly three years as the global crisis raged and analysts expect it to fall short of a projected growth rate target of 25 percent in 2008/09.

One-month volatilities, a gauge for daily fluctuations in the rupee was around 15%, a level it has stayed for most of the month.

The rupee has gained 2.7% this month, helped partly by foreign portfolio inflows of $462 million in December, but is down nearly 20% in 2008 on equity withdrawals of more than $13 billion.

Most Asian currencies moved in narrow ranges on Wednesday in dull trade ahead of year-end holidays, but the volatile South Korea won gained more than 2% on suspected official intervention.