MUMBAI (Commodity Online): The Indian rupee registered a weak start on Thursday, June 23, 2011 alongside most of its regional peers tracking gains in the US dollar overseas.
Meanwhile, the local shares commenced in the red terrain further weighing down the domestic currency. Rupee opened at Rs. 44.92 per dollar and dropped to a low of 44.96 so far during the day.
A slight improvement in the domestic equities after a bleak start aided rupee to an intra day high of 44.90. However, any gain from domestic shares is likely to be offset by sharp drop in the euro against the greenback.
In the spot currency market, the Indian unit was last seen trading at 44.91 at 10.45 AM IST, lower by around 2 paise or 0.04% as compared to previous close at 44.89.
A bout of volatility was witnessed as the key benchmark indices edged lower in early trade on weak Asian stocks, which fell after the US Federal Reserve lowered its growth forecast for the world's biggest economy.
Foreign institutional investors (FIIs) sold Indian shares worth Rs 287.40 crore and domestic funds bought shares worth Rs 157.37 crore on Wednesday, as per provisional figures released by the stock exchanges. Local share managed to edge up and at the time of writing, India's key benchmark BSE Sensex was up around 69.70 points at 17620.33 while S&P CNX Nifty was also higher by around 12.80 points at 5291.10.
Rise in the US dollar in early Asia today restricted gains in the Asian currencies. The dollar strengthened after the Federal Reserve's statement that the current difficulties of the US economy were mostly temporary in nature and did not warrant more stimulus.
Although the Fed vowed to keep interest rates at near-zero levels "for an extended period," it confirmed there was no need for more quantitative easing, the policy of buying bonds to pump more liquidity into the economy.
The US dollar index, which tracks the greenback against a trade-weighted basket of six major currencies, is currently higher by 0.35% at 75.05. Among Asian currencies, the Taiwan dollar is lower by 0.14% at 28.88, the Indonesian Rupiah 0.12% at 8602.50 and the South Korean won by 0.21% at 1076.20 as against the US dollar.
In the domestic currency futures market on the NSE, the forward month June USD/INR contract opened on Thursday at 44.95, higher than the spot market rupee. The contract hit an intra day high at 44.98 and registered a low at around 44.92 so far during the day.
At the time of writing, the NSE as well as MCX Jun 2011 USD/INR contract was trading at around 44.94 lower by around 0.02% compared to previous close at 44.95.
