The Indian rupee was pushed down on Tuesday by a 3 percent fall in local stocks and dollar demand from oil importers and arbitrageurs, although dealers said central bank intervention helped it recover some of its losses. The partially convertible rupee ended at 45.72/73 per dollar, off a low of 45.96 but still 0.6 percent weaker than its previous close of 45.45/46.
Last week the rupee fell to a two-year low of 46.99. "The stocks were negative and there was a lot of oil and non-deliverable forwards-related dollar buying which weakened the rupee today," a dealer with a foreign bank said.
"The central bank is likely to have sold around $300 to $500 million in intervention today," he added.
One-month offshore non-deliverable forward contracts were quoting at 45.85/95. A gap between the rates opens an arbitrage opportunity where dollars are bought against the rupee in the onshore market and sold offshore. Foreign fund outflows, a key factor in the rupee's 13.8 percent decline in 2008, total a net $8.9 billion so far in 2008. Last year, foreign investors brought in a record $17.4 billion.
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