Rupee likely to open weak; seek cues from equities

The Indian rupee may continue to remain on the back foot on Tuesday with the US dollar weakening against most major currencies. The rupee is likely to open weaker and seek cues from equities.The rupee plunged to close at 2-year low of 66.82 against the American dollar on Monday. The benchmark 7.72 percent government security maturing in 2025 slumped to Rs 99.4350 from 99.7575 previously, while its yield rose to 7.80 percent.

A week before the data comes in - with a one week's lag - about USD 3.5 billion went out. Foreigners have been selling every day. Figures show at least a triple digit million dollar figure of people pulling out money and that explains the fall in the rupee as well.Meanwhile, China is believed to have sold 2.5 percent of its reserves of USD 94 billion in August to boost its equity markets as well as the economy.

Today's opening may see rupee unchanged on the back of the outflows from China. The number came out on Monday and it was positive because people believed that they had sold USD 200 billion. So the fact that the number - the official figure - came in less than half was a relief yesterday for most Asian markets.