The partially convertible rupee was at Rs49.92/93 per dollar, barely moved from the previous close of Rs49.92/94
Mumbai: The rupee hovered near one-week high on Friday, helped by the US dollar’s weakness against some currencies but demand from oil refiners for import payments limited its rise.
At 9:41am, the partially convertible rupee was at Rs49.92/93 per dollar, barely moved from the previous close of Rs49.92/94.
It hit a one-week high of Rs49.85 on Thursday and at its current level is 4.5% above a lifetime low of Rs52.20 hit in early March due to a revival in capital flows into the domestic stock market.
Foreign investors bought more than $900 million worth of stocks in April, trimming their net sales for the year to $437 million. They sold more than $13 billion in 2008 slicing off a fifth of the currency’s value.
But the rupee has given up some ground and remains vulnerable to investor appetite for risk and political uncertainties.
Westpac Institutional Bank expects the one-month rupee offshore non-deliverable forwards to weaken to 51.25/30 from 50.11/50.21 on Friday.
“India’s general elections are a potential wildcard for the rupee over the next month, with plenty of scope for outcomes that will worry foreign direct and portfolio investors already unenthusiastic about fresh investment,” it said.
The Reserve Bank of India deputy governor Rakesh Mohan said on Thursday the slowdown in external demand and the lack of external financing has dampened growth prospects for the emerging market economies than anticipated a year ago.
Private capital outflows from these nations are expected to rise to a record $190 billion in 2009, compared with net inflows of $617 billion in 2007, he said.
The rupee’s prospects has also been dented by dimming growth prospects and falling interest rates which are chipping away at the rate differential advantage over other countries.
The central bank on Tuesday cut its key lending rate for the sixth time since October to bolster growth, which has taken a bigger-than-expected hit from the global downturn.
