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Rupee falls to 2010 low as stocks drop

Rupee falls to 2010 low as stocks drop

Mumbai: The rupee dropped to its lowest in 2010 on Friday as rising risk aversion among global investors on concerns about the debt of some European countries saw them pull funds from stocks and emerging markets.

The partially convertible rupee ended at 46.73/74 per dollar, having fallen to 46.7650, its lowest since 30 December. It fell more than a percent from Thursday’s close of 46.24/26.

“The European crisis has increased the bearishness in the rupee," said a senior dealer with a foreign bank.

The BSE 30-share index Sensex fell 2.7% to its lowest close in three months, hit by the sell-off in global markets.

Foreign capital in local equities is a key influence on the rupee. Foreign investors have been net sellers of about $1.8 billion of shares since 12 January.

The dollar hit a seven-month high against a currency basket on Friday, boosted by risk aversion as the cost of insuring the debt of some euro zone nations against default hit record highs on worries over their fiscal positions.

The dollar index, a measure of its performance against six major currencies, was up about 0.3%.

One-month offshore non-deliverable forward rupee contracts ended at 46.80/87, 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 46.7750 and 46.78 respectively.

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