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India rupee dips on global concerns, inflows strong

The partially convertible rupee ends at 39.29/30 per dollar, slipping from the previous finish of 39.265/275.

business Updated: Jan 16, 2008 19:00 IST
CJ Kurrien
CJ Kurrien

The Indian rupee drifted away from a near decade high on Wednesday, weighed by concerns that a recession in the United States would spur a wave of risk reduction, though capital inflows remained buoyant, dealers said.

The partially convertible rupee ended at 39.29/30 per dollar, slipping from the previous finish of 39.265/275 but within striking distance of a decade-high of 39.16 hit in November.

"The global sentiment is beginning to affect the market a bit, but the flows continue," said a dealer with a foreign bank.

Stock indexes in Asia fell on Wednesday after a record loss at Citigroup and weak US retail sales entrenched fears the world's top economy may slide into recession.

India's benchmark share index fell nearly 2 per cent, extending Tuesday's 2.3 per cent fall.

Still, interest in Indian equities remained strong, and a run of initial public offerings is expected to keep foreign inflows strong. A $3 billion initial public offering by Reliance Power was covered more than 10 times on its first day on Tuesday.

Dealers also kept a watchful eye on the central bank, which is widely believed to have bought about $5 billion in the past two weeks in a bid to prevent the rupee from rising rapidly.

Data released on Wednesday showed the central bank bought $7.83 billion in November, taking the total to $72.13 billion in intervention in the first 11 months of 2007.

Analysts said the central bank had played an active role in December and January to keep the rupee weaker than 39.20.