MUMBAI The rupee snapped a three-day winning streak after hitting a one-week high early in the session on Friday as sharp losses in the euro prompted banks to cover their short dollar positions heading into the weekend.
The euro fell to a three-week low against the greenback, pushing the dollar index to a seven-week high, with traders citing option-related selling of the euro by macro investors.
“The market is getting thinner and moves have been tracking the flows. In the morning there were moves tracking flows, but later we started tracking the euro,” said Paresh Nayar, head of fixed income and forex at First Rand Bank. Nayar added, “54.20 seems like a good resistance for the dollar/rupee and if that holds, 53.20 can be seen”.
The partially convertible rupee closed at 53.8050/8150 per dollar versus its previous close of 53.6950/7150. It had hit 53.61 earlier in the session, its strongest since October 25. The rupee lost 0.2 per cent on the day, taking its fall to 0.5 per cent on the week.
Traders said a further fall in the rupee was averted by gains in the local share market.
Foreign fund inflows into the domestic share market are a key determinant of the rupee’s fortunes.
