Indian rupee drops

Wednesday, August 26, 2009

MUMBAI: The Indian rupee weakened on Tuesday as a choppy sharemarket failed to provide clarity on the direction of foreign fund flows and month-end dollar demand from importers gained momentum. The partially convertible rupee closed at 48.75/76 per dollar, off an early low of 48.85 but still 0.3 percent below its previous close of 48.62/63.

"There was only buying today. Even when Sensex was up 400 points yesterday, the dollar-rupee was bid. Today equities were negative for large part of the day, so one can imagine," said Madhusudan Somani, head of foreign exchange trading at Yes Bank.

"There was decent demand from oil companies, along with some month-end demand as well, keeping it bid. Lack of inflows completely skews the demand-supply picture, so the downside for the dollar-rupee is limited," he added. One-month offshore non-deliverable forward contracts were quoting at 48.80/90.

In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at 48.7775 and 48.7850 respectively, with the total traded volume on the two exchanges at a high $2.2 billion.

(Reuters)

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