Rupee weakened for the first time this week as foreign buyers sold domestic equities heavily. Overseas demand for Indian shares may decline as earnings at domestic companies shrink. The currency fell after SEBI data showed that FIIs sold more Indian shares than they bought for the eighth straight day on Jan. 27. Sensex declined 0.2%, ending a two-day rally.
The rupee declined 0.1% to close at 48.985 per dollar. The currency has slipped 0.4% this year, extending last year’s 19.2% loss, which was the most since 1991.
The rupee strengthened earlier on optimism U.S. President Barack Obama’s US$819bn stimulus package to lift the US economy out of recession will benefit emerging economies as well.
Offshore forward contracts showed traders increased bets for weakness in the rupee for the first time since Jan. 23. Non-deliverable forward contracts showed traders reduced bets for further weakness in the rupee. Offshore contracts indicate the rupee may trade at 49.09 to the dollar in a month, compared with expectations for 49.01 yesterday.
