Rupee weakens on dollar rise

Rupee weakens on dollar rise

Mumbai: The rupee eased to its lowest in more than a week on Monday, as the dollar’s rise against the euro triggered buying in the US currency by importers.

The partially convertible rupee ended at 45.58/59 per dollar, off an intraday low of 45.6750, its lowest since 5 March, and about 0.3% weaker than 45.43/44 at close on Friday. The market is closed on Tuesday for a local holiday. “The euro’s fall on concerns about Greece basically moved the market today," said a senior trader with a foreign bank, adding he expected the rupee to trade in the 45.40-45.60 range when the market opens on Wednesday.

The euro fell against the dollar on concerns a possible financial package for Greece would not be sufficient to ease broad sovereign debt worries in the euro zone.

The index of the dollar against six major currencies was up about 0.3%.

Traders said higher-than-expected inflation also raised concerns whether price pressure would impact a bounce back of growth in Asia’s third-biggest economy.

Annual wholesale price index (WPI) based inflation accelerated to 9.89% in February, the highest since October 2008, and above a Reuters poll forecast of 9.62%.

It was also well above the Reserve Bank of India’s (RBI) end-March projection of 8.5% and the 8.56% January reading.

In January, the RBI raised its economic growth forecast for 2009-10 to 7.5% from 6% with an upward bias. The national budget on 26 February projected the growth at 7.2%.

The BSE benchmark Sensex erased early losses to close almost steady. Foreign capital is a key driver of the local currency.

One-month offshore non-deliverable forward contracts were quoted at 45.68/70, 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 45.6725 and 45.6750 respectively.