Rupee snaps 6-day rally as shares fall
The Rupee snapped a six-session rally and dropped today, tracking lower domestic shares that could slow foreign inflows.business Updated: Dec 08, 2010 11:17 IST
The Rupee snapped a six-session rally and dropped on Wednesday, tracking lower domestic shares that could slow foreign inflows.
The dollar's broad gains against major currencies also weighed on the Indian unit.
At 9:50 am, the partially convertible rupee was at 45.01/02 per dollar, 0.8% weaker than 44.64/65 at close on Tuesday.
"The rupee is moving in line with the euro. Yesterday's rally was quite a surprise for most participants; so almost complete reversal of the gains made yesterday," a senior foreign exchange dealer with a large state-run bank said.
"Some sellers are coming in around current levels, some more are likely to come in at 45. So some support will be seen, but a lot will depend on what happens after Europe opens."
The US dollar rose in early Asian trade and looked set to climb further in the short term, having powered across the board overnight on the back of a spike in US bond yields.
"Euro looks weak and could head towards $1.3190-$1.3140, so we should see 45 being broken and then possibly 45.10 is likely during the day. Initially it could hold in 44.85-45.00 range," said a senior trader and technical analyst at a private bank.
The euro was trading at $1.3219 while the index of the dollar against six major currencies was 0.44% higher at 80.206 points.
The main BSE share index was down 1% on global macroeconomic concerns and worries of a fuel price hike after crude oil prices jumped to a 26-month high.
Foreign funds have invested $29.3 billion in Indian equities this year, driving the benchmark index about 14% higher, while the rupee has gained around 4%. Last year inflows of $17.5 billion had helped the rupee rise 4.7%.
Traders said there were no major inflows expected ahead of an initial public offer by Punjab and Sind Bank that opens on Dec 13.
Punjab & Sind Bank aims to raise up to 4.8 billion rupees in the IPO at an indicated price band of 113-120 rupees a share.
One-month offshore non-deliverable forward contracts were quoted at 45.30, 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 at 45.2175 while that on the United Stock Exchange was at 45.22, with the total traded volume on the three exchanges at about $810 million.