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Rupee at 1-month low as shares drop

The Indian rupee fell to its lowest in nearly a month on Wednesday, weighed down by a wobbly stock market and the dollar's strength overseas.

business Updated: Jul 07, 2010 10:30 IST

The Indian rupee fell to its lowest in nearly a month on Wednesday, weighed down by a wobbly stock market and the dollar's strength overseas.

Traders said there were hardly any inflows and the market was adjusting to moves in other currencies such as the euro.

At 10:07 am (0437 GMT), the partially convertible rupee was at 47.05/06 per dollar, its worst since June 10, and weaker than Tuesday's close of 46.89/90.

"Looking at the euro and indices, it seems the rupee should touch 47.10 on the downside today," said a senior dealer at a private bank.

The euro dipped on Wednesday but was still hovering near a recent seven-week high, with traders saying it could rise further in the near term due to doubts about a recovery in the US economy and positive technical signals.

"There is no (dollar) inflow as of now. The next big trigger will be the monetary policy," a dealer at a state-run bank said.

Foreign fund flows into and out of the stock market set the rupee's trend. So far in 2010, foreigners have bought a net around $6.8 billion worth of shares, after investing a record $17.5 billion last year.

The central bank is expected to hike rates again in its quarterly review on July 27 after a surprise increase last Friday, a Reuters poll showed.

Asian currencies were mixed versus the dollar. See for a snapshot. The index of the dollar against six majors was up 0.21 per cent.

Indian shares were trading down 0.5 per cent taking cues from Asian markets.

One-month offshore non-deliverable forward contracts were quoted at 47.29, 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 were both at 47.21, with the total traded volume on the two exchanges at about $1.02 billion.