OT:Indian rupee falls to 1-month low against dollar
MUMBAI The rupee slumped to a one-month loss on Friday to post its biggest weekly decline in four months on the back of huge dollar buying from state-run oil and defence companies, along with demand from foreign banks.
Oil companies, the largest buyers of dollars in the domestic currency market, were spotted buying the greenback through the session, more
than offseting the large dollar sales from exporters.
The rupee remains vulnerable for more falls, with a break above 54 seen possible in next week’s short trading week, particularly if the euro retreats due to the continued uncertainty about whether Spain will request a bailout.
“Past couple of days state-run banks have been buying dollars for oil as well as for the government for defence payments,” said Pramod Patil, a foreign exchange dealer with United Overseas Bank. “This is a good level for exporters to sell. I expect exporter selling to continue above the 54 level if that is breached as well,” he added. The partially convertible rupee fell 43 paise to close at 53.84/85 per dollar, compared to its close of 53.41/42 on Thursday. The rupee weakened at one point to as much as 53.99, its weakest since September 21.
The rupee lost 0.8 per cent on the day and 1.9 per cent on the week, marking its biggest weekly loss since the June 22 week. Since the start of the rupee’s fall after a five-week rally, the rupee
has lost 3.7 per cent of its value over 10 sessions. Traders predict a 53.00 to 54.50 range for the pair next week.
Traders also said there was good dollar buying from foreign banks who had large “buy orders” from the greenback from their customers in the offshore market. “A lot of short-USD positions were stopped out with the move above 53.80, which lead
to massive dollar receiving,” said a senior
non-deliverable forwards dealer based in Singapore.
The one-month offshore NDF rate was at around 54.16 while the three-month was at 54.70.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange closed at around 53.99 with a total traded volume of around $7.15 billion.
The Indian benchmark sensex plunged by 109.62 points or 0.58 per cent while foreign institutional investors (FIIs) injected a mere $24.13 mln yesterday as per Sebi data. The dollar index, a gauge of six major global currencies, was up by 0.11 per cent, as the first day of a summit meeting of European Union leaders produced little more than a widely-expected agreement to establish a single supervisor to oversee euro-zone banks.
