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Rupee falls on outflow worries

Rupee falls on outflow worries

Mumbai: The rupee retreated from two-week high on Thursday as a fall in share prices raised concerns of more capital outflows and the dollar’s gains against the euro weighed on sentiment.

The partially convertible rupee ended at 46.24/26 per dollar, 0.6% weaker than its previous close of 45.97/98. On Wednesday, it rose to 45.94, its strongest since 21 January. “The market took cues from the fall in share prices and weaker global markets," said a senior dealer with a foreign bank, adding that he expected the rupee to trade in the 46.20-46.40 range per dollar on Friday.

The BSE 30-share index Sensex fell 1.6% to end just above a three-month closing low touched earlier this week.

Foreign fund investments into local shares are a key driver for the stockmarket and the rupee. Foreign investors have been net sellers of $1.9 billion worth of stocks in 12 of the last 15 trading sessions.

The euro’s fall against the dollar also triggered selling in the rupee. The single currency touched a seven-month low against the dollar on concerns of some euro zone economies ahead of the European Central Bank’s policy decision later on Thursday.

One-month offshore non-deliverable forward contracts were quoted at 46.25/29, little changed from 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 46.30 and 46.2925 respectively.

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