Rupee drops on weak Asian cues

Rupee drops on weak Asian cues

Mumbai: The partially convertible Indian rupee weakened on Tuesday as lower Asian shares and a stronger dollar overseas soured sentiment.

At 9:25am, the rupee was at Rs46.63/64 per dollar, 0.4% below its Monday’s close of Rs46.465/475.

Dealers said they would wait for the local sharemarket open for further direction. Some month-end dollar demand was also seen in the market, they said.

Oil is India’s biggest import and refiners are the largest buyers of dollars in the local currency market. Dollar demand from refiners and importers tends to peak at the end of each month, when they make payments.

“We continue to watch the rupee within 46-47 in the short term. This range will hold good till EUR/USD trades within 1.4750-1.5050 while the stock market trades in consolidation mode within 16,500-17,500," J. Moses Harding, head of global markets at IndusInd Bank, wrote in a daily note.

“The strategy for importers would be to buy 12-month dollars on overshoot to 47.00-47.25 while exporters to sell 12-month receivables at 48.25-48.40," he said.

The dollar trimmed losses on Tuesday as Tokyo stocks failed to follow up a stronger day on Wall Street, prompting some to buy the dollar back, and as some investors closed dollar short-positions before the Thanksgiving holiday.

The index of the dollar against six majors was up 0.2%. Most Asian units were weaker compared to the dollar.

At 8:25am, the MSCI index of Asian stocks ex-Japan was down 0.5% while the Nifty India stock futures traded in Singapore were marginally lower.

Indian shares are expected to open flat to lower tracking weak Asian markets, but the losses are likely to be limited as cash-rich foreign funds look for investment.

Foreign buying of more than $15 billion worth of local shares has helped lift the rupee off a record low of 52.2 hit in early March and continues to be a key factor driving the rupee.

One-month offshore non-deliverable forward contracts were quoted at 46.64, little changed from the onshore spot rate.