India rupee unwinds gains, exporters expect weakness

India rupee unwinds gains, exporters expect weakness

Mumbai: The Indian rupee unwound most of its gains on 13 August on heavy dollar buying by foreign funds and oil refiners and a lack of supplies from exporters, traders said.

The partially convertible rupee ended at 40.625/635 per dollar, weaker than the day’s high of Rs40.53 but a tad above Friday’s close of 40.635/645, which was its weakest close in over a month. It hit a nine-year high of 40.20 in late July. “Exporters expect the rupee to weaken further. There were few sellers of the dollar above the 40.60 level," a foreign bank trader said.

Data on Monday showed India’s central bank bought $3.19 billion in intervention in June, taking its dollar purchases to $26.7 billion so far in 2007, and traders expect further intervention on any rupee strength to help maintain export competitiveness.

A key factor in the rupee’s rise this year - at its peak it was up about 10% - has been foreign buying of local stocks. But foreigners have been net sellers of almost $600 million in the first seven trading days of August.