BackRupee hits 10-week lows tracking euro, shares
Rupee hits 10-week lows tracking euro, shares
PremiumMumbai: Rupee posted its fourth consecutive weekly decline and fell to its lowest level since mid-September on Friday, as sharp losses in the euro and domestic shares weighed on sentiment.
The partially convertible rupee closed at ₹ 45.84/85 per dollar, slightly off the day’s low of ₹ 45.91 - its weakest since 17 September 17 - but still 0.7% weaker than 45.5150/5250 at close on Thursday.
“Rupee was mainly tracking the euro today. If further losses are seen in the euro beyond $1.3150, the rupee could drop to 46 levels. But overall, the near term looks choppy and I expect a range of 45.50-46.00," said Naveen Raghuvanshi, an associate vice president with Development Credit Bank.
The euro fell to a fresh two-month low of $1.3199 against a resurgent dollar on Friday as mounting speculation that Portugal will need to follow Ireland in seeking financial aid further unsettled nervous investors.
The dollar’s index against six major currencies was up 0.7% when the rupee market closed.
Dealers said some exporters and corporates were seen selling dollars to take advantage of the sharp drop in the rupee but the sales were not large enough to offset the outflows.
“There were some outflows also seen due to Thanksgiving holiday in the US yesterday too, so that also weighed on the rupee," Development Credit Bank’s Raghuvanshi said.
“There were some inflows for the MOIL share sale yesterday, but due to the small size of the issue, not much impact is expected," he added.
State-run Manganese Ore India Ltd (MOIL) plans to raise $276 million via an initial public offering starting on Friday and closing on 1 December.
Traders said weakness in local equities further added to the selling pressure on the rupee.
Shares fell for the third straight week, their biggest such losing streak since February, after they shed 0.9% on Friday, as a bribe-for-loans corruption scandal rocked the nation, which was still digesting the recent Commonwealth Games and telecoms scandal.
Foreign funds sold shares worth $116.6 million on Thursday as per the latest available official data, taking total portfolio investments in 2010 to a record $28.8 billion, in addition to last year’s $17.5 billion.
The one-month onshore dollar premium closed at 26 points compared with 24.25 points on Thursday, while the one-year onshore premium was marginally lower at 206.50 points versus 210.50 points.
One-month offshore non-deliverable forward contracts closed at ₹ 46.16, weaker than the onshore spot rate, suggesting a bearish near-term outlook.
In the currency futures market, the most traded near-month dollar-rupee contract on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 46.1625, 46.17 and 45.7375 respectively, with total traded volume on the three exchanges at $7.7 billion.
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