Rupee eases on weak stocks, global jitters

Rupee eases on weak stocks, global jitters

Mumbai: The rupee eased on 13 December with sentiment hurt by losses in the stock market and as initial euphoria over joint action to boost global liquidity by the US Fed and other central banks wore off.

The rupee ended at 39.395/405, losing ground from the previous close of 39.375/385. It hit 39.16 last month, its strongest since March 1998.

“There’s a lot of uncertainly prevailing at the moment, so we might see some wild swings over the next few sessions," said a senior dealer with a foreign bank.

Foreigners have bought Indian shares worth $1.1 billion (Rs4,323 crore) in the eight days till 11 December, taking total purchases since the start of January to $16.9 billion.

Foreign buying of Indian shares has been a key driver of the rupee this year, helping it gain about 12%, to be among Asia’s best performing currencies against the dollar.

The US Fed cut its benchmark funds rate by a quarter point on 11 December, and followed up the next day in a coordinated move with some other central banks to stem a mounting credit crisis.

The Federal Reserve, European Central Bank and the Swiss, Canadian and British central banks acted in unison to improve liquidity in the financial system, where interbank lending had all but frozen since the U.S. subprime crisis hit.