MC:Rupee snaps 2-day rise on wobbly euro, local shares
The rupee snapped a two-day rally on Thursday, tracking a choppy euro on uncertainty over the outcome of a euro zone summit for the second bailout plan for Greece, while weak local shares also weighed.
The partially convertible rupee was at 44.5150/5250 per dollar, 0.16% weaker than Wednesday's close of 44.45/46, and sharply lower from the intraday high of 44.4275.
"Market is worried as to how the EU will limit the spread of the debt crisis and is hoping a concrete plan will be announced to ensure this," said Panchadev Negi, deputy manager of forex dealing at State Bank of Travancore.
Fears that Greece's debt crisis will spread to bigger economies in the euro zone have kept markets on edge since early July.
The euro was at USD 1.4182 versus USD 1.4222 at end of local forex trade on Wednesday.
After market hours, the single currency rose sharply as the EU summit draft proposals made reference to extending EFSF loans and allowing the rescue fund to intervene on a precautionary basis.
The index of the dollar against six major currencies was down 0.16% at 74.914 points from 74.837 points at end of domestic currency trade on Wednesday.
Earlier on Thursday, EU sources said the European Central Bank is willing to let Greece slip into temporary default.
Indian shares dropped for a second day on Thursday as quarterly earnings mostly indicated companies were facing pressure on profit margins, while the central bank was unlikely to ease its tightening policy due to stubbornly high inflation.
The one-month onshore forward premium was at 23.25 points from 24 points on Wednesday, while the three-month was at 70.25 points from 71.75 points and the one-year was at 228.75 points versus 229.25.
One-month offshore non-deliverable forward contracts were quoted at 44.70, 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 44.5375 and on the United Stock Exchange were at 44.5350. The total volume was at USD 9.57 billion.
