The Indian rupee fell on Tuesday, ending a two-day rally as heavy dollar buying by oil importers and a shaky stock market raised concerns of a possible dollar shortage in the market. The partially convertible rupee ended at 42.60/61 per dollar, half a percent weaker than Monday's close of 42.40/41.
The rupee is down 7.4 percent in 2008, and analysts expect the central bank will maintain recent efforts to support the currency, including through market intervention on falls beyond 43 per dollar. One-month offshore non-deliverables forwards were quoting at 42.65/42.75, slightly weaker than the onshore rate.
"Demand conditions for the dollar-rupee are still heavy and until there is further clarity on the central bank's move on oil companies, the pair should trade in a broad 42.20-42.90 band," said Indrajit Sengupta, chief dealer at state-run Canara Bank.
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