Rupee hits 11-week low; outflows, oil payments eyed
The rupee fell to its lowest in 11 weeks on Tuesday, extending losses to as much as 2.9% over six sessions, on heightened worries about foreign fund outflows as investors fled risky assets across markets.
August 09, 2011 / 13:08 IST
The rupee fell to its lowest in 11 weeks on Tuesday, extending losses to as much as 2.9% over six sessions, on heightened worries about foreign fund outflows as investors fled risky assets across markets.
While a drop in world oil prices was positive for energy-hungry India, the country's dues of more than USD 3 billion for imports from Iran were an overhang for the rupee, traders said."Assuming an outstanding bill of USD 5 billion to Iran, I think there is a fair bit of oil related dollar buying still to come," said a senior foreign exchange dealer at a private-sector bank."So the rupee's direction will be impacted by the quantum of oil dollar buying we see."To convert USD to INR, click here http://www.moneycontrol.com/mccode/currencies/On Monday, Iran said it had so far received USD 1.4 billion from India in the last 10 days for long overdue oil debts. Brent crude plunged to a six-month trough below USD 99 a barrel, in a two-session drop of nearly USD 10, after a US credit downgrade intensified fears about a global slowdown in demand for energy.At 11:53 am (0623 GMT), the partially convertible rupee was 45.17/18 to a dollar, after weakening to 45.40 early, its lowest since May 25. It had weakened 0.5% on Monday to 44.965/975.Traders said exporters were cashing in their dollars with the rupee falling sharply over the past one week."There is a big support for the rupee near 45.50 level and unless equities drive off the cliff, we could see a slight rupee recovery mostly due to profit sales," said a foreign exchange dealer with another private-sector bank.The main 30-share BSE index pared losses to 0.4%, after initially sliding 3.3% to its lowest in more than 14 months on global jitters. The Swiss franc surged to a record high against the euro in Asia as investors' confidence was shattered by extended falls in regional share prices, prompting them to flock to safe-haven currencies. The euro was at USD 1.4228 from USD 1.4257 when the rupee closed on Monday. The index of the dollar against six major currencies was down 0.22% at 74.594, but above 74.540 when the local market closed on Monday.The one-month onshore forward premium was at 17.50 points from 20 points on Monday, the three-month was at 51.25 points from 58.25 and the one-year onshore forward premium was at 164 points from 178.One-month offshore non-deliverable forward contracts were quoted at 45.39, weaker than the onshore spot rate.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 were all at 45.3425. The total volume was at USD 7.51 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!
