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Rupee hits 3-week low, weak shares weigh

business Updated: Jul 01, 2010 11:26 IST

Reuters
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The Indian rupee dropped to its lowest level in more than three weeks on Thursday, weighed down by falling stocks and the dollar's gains versus major currencies.

At 10:46 a.m. (0516 GMT), the partially convertible rupee was at 46.70/71 per dollar, after hitting 46.78/79 that was its weakest since June 11, and compared with 46.45/46 at close on Wednesday.

"The rupee is weak due to (dollar) buying in the NDF (non-deliverable forwards) apart from global stocks and Asian currency weakness," said Sudarshana Bhat, chief dealer at state-run Corporation Bank.

One-month offshore NDF contracts were quoted at 46.84/94, weaker than the onshore spot rate.

The rupee fell 3.3 percent in the June quarter, its worst drop since the first quarter of 2009, when it had shed 4 percent.

The main stock index dropped more than 1 percent as risk appetite dampened across global markets as doubts resurfaced about the health of the world recovery and fresh concerns regarding Europe's financial strength.

Indian manufacturing growth cooled in June after a surge in activity the prior month, mainly due to slowing production and rapidly easing input price pressures, a survey showed on Thursday.

"I expect the rupee to move in a range of 46.65 to 46.80 today. Selling (of dollars) should come at 46.80 levels," Bhat added.

The index of the dollar against six major currencies was up 0.1 percent and would be watched, dealers said.

The euro hit a lifetime low against the Swiss franc on Thursday, as weaker-then-expected Chinese data added to doubts about the strength of the global recovery, while jitters about funding strains in the euro zone lingered.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at 46.82.