LM:Rupee drops against dollar for the first time in a week
Mumbai: The Indian rupee weakened against the dollar for the first time in a week as banks covered their dollar positions ahead of industrial production and consumer price inflation numbers to be released later in the day.
At 2.45 pm, the rupee was trading at 63.76 per dollar, down 0.62% from the previous close of 63.3650. It opened at 63.2450 per dollar and touched a high and a low of 62.9238 and 63.82, respectively.
Trade was thin as a lacklustre local stock market also prevented dealers from taking big dollar positions. India’s benchmark Sensex was trading down 0.87%, or 173.99 points, at 19,823.46.
The rupee had gained 6.89% between 4 September and 11 September from 67.73 per dollar to 63.37 per dollar before the drop on Thursday.
Aman Mahna, senior forex dealer with FristRand Bank Ltd, said demand was weak mostly for interest payments linked to external commercial borrowings (ECBs) of Indian companies, however dollar inflows in the stock market which had supported the rupee in the last one week were thin on Thursday.
“The rupee is tracking the equity markets. Traders are also not taking a big position ahead industrial production and consumer price inflation data due after market hours,” Mahna said.
Radhika Rao, India economist with DBS Bank Ltd, said she expects India’s industrial production to contract 0.5% in July, slower than a 2.2% contraction in June.
“Trend-wise, industrial production shows no clear changes. Despite the upturn in the core industries index in July, the weakness in mining and manufacturing have been notable in recent months,” Rao said in a note on Thursday.
She expects consumer prices to accelerate 9.7% in August from 9.55% between April and June 2013 mainly due to higher international crude prices, rupee depreciation and an upward adjustment in the administered fuel prices this year.
Since January, the rupee has weakened 13.8% and has lost the most among Asian currencies during that period.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 81.55, up 0.03% from the previous close of 81.518.
The yield on the 10-year government bond was at 8.52%, down 5 basis points from the previous close of 8.471%. It opened at 8.459% and touched a low of 8.426%.
The overnight call money rate was at 10.35% compared with the previous close of 10.25%. It opened at 10.35% and touched a high and a low of 10.4% and 10.05%, respectively.
