Rupee falls from 7-week highs on weak shares

Rupee falls from 7-week highs on weak shares

Mumbai: The rupee slipped from its highest in nearly seven weeks on Friday as share prices dipped raising concerns whether capital inflows would keep up the momentum for the rest of the year.

Traders also awaited the US non-farm payrolls data, due later in the day, for cues on the dollar’s movement next week.

The partially convertible rupee ended at 46.15/16 per dollar, after hitting 45.97, its highest since 22 June and slightly stronger than Thursday’s close of 46.18/19. It gained about 0.5% on the week.

“There was support at around 46.09, which broke and it was quick to break 46.0 itself. Below 46 there were some oil companies buying as well as there was some correction on the euro and the pound," said Paresh Nayar, head of foreign exchange and money markets at First Rand Bank in Mumbai. “There is also good support between 45.90 and 46.0. These are crucial levels to watch," he added.

The BSE 30-share index Sensex logged its fourth weekly rise in five gaining 1.5% this week, but shed 0.2% on Friday.

Foreign investment inflows to the domestic share market is a key driver of the rupee. Foreign investors have bought nearly $11 billion so far in 2010, adding to record inflows of $17.5 billion in 2009.

A pressured dollar had supported the rupee earlier in the session. The US currency was near a 3-1/2-month low versus a currency basket as investors braced for fresh US data expected to show a fall in jobs for a second month.

The index of the dollar against six major currencies was little changed at the time of the local market’s close.

One-month offshore non-deliverable forward contracts were quoted at 46.27, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX ended at 46.2650 and 46.27 respectively, with the total traded volume on the two exchanges at about $4 billion.