Rupee hits 3-week low; weak shares, euro weigh
The rupee closed weaker on Monday after touching a three-week low on the back of negative local shares and a fall in the euro, while dollar demand from oil refiners also weighed.
June 21, 2011 / 08:42 IST
The rupee closed weaker on Monday after touching a three-week low on the back of negative local shares and a fall in the euro, while dollar demand from oil refiners also weighed.
The partially convertible rupee ended at 45.00/01 per dollar, after falling to 45.06 -- a level last seen on May 31, and 0.3% weaker than Friday's close of 44.86/87."Today the stock market had crashed on account of talks of reviewing the treaty with Mauritius. That is the main reason for the rupee weakening, followed by dollar strengthening against other currencies," said Sudarshana Bhat, head of forex trading at state-run Corporation Bank."Tomorrow we feel the rupee may touch 45.20 levels if the stock market continues to be weak," he said.The BSE Sensex fell for the eighth time in nine sessions, shedding 2% on Monday, on concern the government may review a tax treaty with Mauritius, leading to worries foreign inflows could be hit.Foreign funds were sellers of Indian shares all of last week, and offloaded about USD 330 million of stocks.The euro was pinned down near recent lows on Monday, as a delay to the next tranche of Greek bailout funds undermined confidence in the common currency, with the options market and technical charts suggesting more losses. The euro was trading at USD 1.4217 at end of local trade on Monday, compared with USD 1.4269 at the time of the local market close on Friday.The index of the dollar against six major currencies was 0.51% higher at 75.379 points.Dollar demand from oil importers also weighed on the local unit. Oil is India's biggest import item and oil refiners are the largest buyers of dollars in the domestic market.The one-month onshore forward premium was at 23 points versus 24 at last close. The three-month was at 70.25 points from 74.50 and the one-year was at 230.75 points from 251.One-month offshore non-deliverable forward contracts were quoted at 45.19, 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 the MCX-SX were both at 45.0750, while it was at 45.0725 on the United Stock Exchange. The total volume was at $9.78 billion. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
