Mumbai: The Indian rupee edged higher on Wednesday tracking a rise in other Asian peers, but losses in local shares and the euro kept a lid on the gains. At 10:20am, the partially convertible rupee was at Rs46.77/78 per dollar, firmer than Rs46.84/85 at close on Tuesday. “The overnight move was more euro centric, with worries resurfacing about the European banking system. Risk is off but most currencies are still to react,” the head of foreign exchange desk at a European bank said. “The rupee should see resistance at 46.75 where good import bids will emerge. Risk aversion is back but equities are not down sharply. People still want higher returns in a scenario where global liquidity stays very high and few places to deploy funds.” The dollar dropped to its latest 15-year low on the yen on Wednesday and was weaker compared to the Asian currencies but most other majors including the euro continued to trade weaker versus the dollar. The market is trying to ascertain how risk-averse it should be after a report reignited concerns about European sovereign debt and banks’ exposure on Tuesday, sending stocks down. Dealers said they would watch the local sharemarket for cues on the direction of capital flows. So far in 2010, foreign funds have invested a net $13.4 billion in Indian equities, adding to last year’s record $17.5 billion inflow. India’s main stock index was trading down 0.3 percent on weak world markets, a day after hitting a 31-month high. One-month offshore non-deliverable forward contracts were quoted at Rs46.96, 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 MCX-SX were at Rs46.89 and Rs46.8925 respectively, with the total traded volume on the two exchanges at about $810 million.

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