Rupee treads water, stock market watched

Rupee treads water, stock market watched

Mumbai: Rupee was little changed today as traders watched the stock market for cues while awaiting demand for dollars from oil refiners.

At 10:15am, the partially convertible rupee was at Rs49.935/945 per dollar, virtually unchanged from its close of Rs49.93/95 yesterday. It had hit a record low of Rs50.6 last week.

“There is not much happening, it is likely to remain flat. There are not too many indicators for the market to track," said Puneet Sharma, chief dealer with state-run Allahabad Bank.

He said Rs49.75 to Rs50 would be the likely range for the day.

Other dealers said that the market would be closely watching the share market to gauge fund flows but some month-end dollar demand from oil refiners and importers could pressure the rupee.

Oil refiners are the largest buyers of dollars in the market and their demand tends to peak at the end of each month when they have to make payments for their imports.

Indian shares rose 1% tracking gains in Asian markets, but unwinding ahead of the expiry of monthly derivatives on Thursday should pull prices lower later.

Outflows in recent months, have been a major factor for the rupee’s decline. Foreign funds have withdrawn a net $13.7 billion from Indian shares after buying a record $17.4 billion last year. The rupee is down about 21% in 2008.

The US Federal Reserve, with the backing of the Treasury, yesterday outlined an $800 billion lending facility to support the market for consumer debt securities. Dealers said this could help the main index rise initially.

Asian stocks were mixed. Japan’s main index was down about 1% while Hong Kong’s index rose nearly 3% and Korean stocks were up 3.6%.