The Indian rupee eased to its lowest in more than a week on Wednesday as oil prices stayed near record levels and a fifth successive fall in the stock market heightened concerns that foreigners were withdrawing funds.
The partially convertible rupee ended at 39.390/3950 per dollar, softer than Tuesday's close of 39.355/365, having fallen as low as 39.42 - its lowest since November 13, according to Reuters data. Earlier this month, the rupee rose to 39.16 per dollar, its strongest level in nearly 10 years.
"We could see more pressure on the rupee this week as oil refiners step up dollar purchases," a trader with a foreign bank said. Oil, India's biggest import, hit a record high above $99 a barrel on Wednesday, and the high prices could widen the trade deficit, which was $64.9 billion in 2006/07.
Traders were also worried that the fall in local share prices could see foreigners pull more money out of the market. Foreign buying of shares has been a key driver for the rupee in recent months, but foreigners have sold a net $400 million of shares so far this month.
Year-to-date they have bought about $16.9 billion of shares, and the inflows have prompted the heavy intervention from the Reserve Bank of India to try to cap the rupee's gains.
Comments
Comments are closed.