Rupee eases as markets fall1 min read . Updated: 26 Oct 2009, 05:56 PM IST
Rupee eases as markets fall
Mumbai: The rupee erased intraday gains to ease on Monday, as weaker equities raised concerns whether this year’s robust capital inflows could be sustained, and traders awaited the central bank’s rate decision on Tuesday.
The partially convertible rupee ended at 46.645/655 per dollar, off the day’s peak of 46.47, and about 0.3% below Friday’s close of 46.50/51. Last Thursday, the rupee had dropped to as low as 46.82, its lowest since 7 October.
“Stocks were the main factor. We heard of some demand from refiners," said a senior trader with a foreign bank.
The Bombay Stock Exchange (BSE) 30-share index fell 0.4% on Monday to its lowest close in more than two weeks. Foreign funds have bought a net $14.1 billion worth of shares so far in 2009, following net sales of more than $13 billion last year.
Traders awaited the Reserve Bank of India’s (RBI) second quarter policy review for cues on the central bank’s stance on rates, growth and capital inflows.
The RBI would keep its benchmark lending and borrowing rates on hold in its quarterly policy review on 27 October, a Reuters poll showed.
Only three of the 20 analysts polled expected a hike in the cash reserve ratio.
Dealers said some dollar buying by refiners also weighed on sentiment. Oil companies usually step up demand towards the end of each month to meet import commitments.
One-month offshore non-deliverable forward contracts were quoting at 46.65/75, marginally below the onshore spot rate.
In currency futures, the active near-month contracts on the National Stock Exchange and MCX-SX were at 46.6350 and 46.6375 respectively, weaker than 46.5175 and 46.5075 on Friday.