RTRS: Indian rupee falls to 1-month low as shares drop
* Hits 48.16 against dollar, lowest since May 18
* Main share index falls 2.9 percent on profit-taking
* Rupee down 2 pct this month, but up 8.5 pct from March low (Updates to close)
By Anurag Joshi
MUMBAI, June 17 (Reuters) - The Indian rupee weakened to a one-month low on Wednesday, weighed down by an almost 3 percent drop in the local stock market that could trigger profit-taking by foreign portfolio investors.
The partially convertible rupee ended at 48.13/14 per dollar after hitting 48.16, which was its lowest since May 18, and about 0.8 percent weaker than Tuesday's close of 47.75/76.
It has lost almost 2 percent this month, but is up 8.5 percent from a record low of 52.2 hit on March 3 as foreigners bought Indian shares worth nearly $8 billion over three months.
"The fall in the stock market was the primary factor, which pulled the rupee lower," a senior trader with a foreign bank, said.
"With the rupee now beyond 48 to the dollar, there is more likelihood of the RBI intervening," he said, referring to the Reserve Bank of India.
The central bank buys or sells dollars through a clutch of state-run banks to check volatility in the local unit.
India's main stock index .BSESN fell 2.9 percent to their lowest close in three weeks, as doubts about the health of the global economy dampened sentiment worldwide and sparked profit-taking on an 86 percent rally since early March. [.BO]
Despite the rupee's losses in June, analysts expect the currency to appreciate by the end of December.
A victory for the ruling coalition in national elections last month has raised hopes for economic reforms such as opening up the insurance and pension sectors and stake sales in state companies.
"The recent election outcome, the revival in global risk appetite and pick-up in capital inflows into India positively affect the balance of payments," Macquarie analyst Rajeev Malik wrote in a note.
"We reiterate our INR/USD (rupee-dollar) forecast of 46 by end-2009, strengthening further to 43 by end-June 2010."
One-month offshore non-deliverable forward contracts PNDF were quoting at 48.22/48.32, slightly weaker than the onshore spot rate. (Editing by Ranjit Gangadharan)
