WebSify
Follow us on
Mail
Print

Rupee falls to near 6-month low on stock losses, importer demand

Source : REUTERS
Last Updated: Tue, May 21, 2013 11:54 hrs
Cashier counts currency notes inside bank in Lucknow

The Indian rupee dropped to its lowest in nearly six months on Tuesday, dragged by late falls in local shares and import-related demand from a large private company.

The rupee has fallen 2.9 percent so far this month against the dollar, despite strong foreign inflows into debt and stock markets as the dollar gains against global currencies on worries about whether the U.S. monetary stimulus will continue.

Lingering domestic concerns such as the wide current account deficit have added to the rupee's weakness.

"There was intermittent selling from custodian banks. But dollar demand was so high that once 55.20 level got broken, there was a short squeeze," said Param Sharma, chief executive at NSP Forex.

"I expect the rupee will weaken further to 55.50, driven by global dollar strength and the stock market rally nearing its peak."

The partially convertible rupee fell for a third straight session to close at 55.41/42 per dollar compared with Monday's close of 55.10/11. The rupee dropped to as much as 55.42, its lowest since Nov. 29.

The rupee was hurt after shares fell in late trade to their lowest close in a week on profit-taking after a recent rally.

Dealers also cited heavy dollar demand from a large private refiner which also added to the rupee's losses.

Traders are awaiting the Federal Reserve's Ben Bernanke testimony before U.S. Congress on Wednesday for a cue to the dollar's outlook.

In the offshore non-deliverable forwards, the one-month contract was at 55.72 while the three-month was at 56.23.

In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 55.4725 with a total traded volume of $5.2 billion.

blog comments powered by Disqus
most popular on facebook
talking point on sify finance