The Indian rupee on Friday snapped a seven-week rally and posted its biggest daily loss in a month-and-a-half as traders positioned for dollar outflows post the country's largest initial public offer allocation. However, most of the foreign funds are likely to have hedged a significant part of their positions, which could reduce the quantum of outflows, traders said.
Coal India's $3.5 billion IPO, the country's largest, was more than 15 times subscribed on its final day, giving the government power to price the issue towards the top of its range and building momentum for other state offers. The partially convertible rupee closed at 44.59/60 per dollar, 0.65 percent below Thursday's close of 44.30/31. This is the rupee's biggest one-day fall since the week of September 7, when it had dropped 0.66 percent on the day.
One-month offshore non-deliverable forward contracts were quoted at 44.92, weaker than the onshore spot rate. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 44.6075, 44.62 and 44.62 respectively, with traded volume on the three exchanges at a low $6.9 billion.
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