The Indian rupee dropped on Tuesday, snapping a three-day winning streak, as strong dollar demand from oil firms to meet month-end import commitments and a pullback in domestic shares from the day's highs weighed heavily. The rupee, which had hit a record low against the dollar on Thursday, appears vulnerable for further falls, especially given fragile global risk sentiment because of the euro zone's woes.
Concerns about India's fiscal and economic challenges are also impacting the rupee. The country said on Tuesday it will allow foreign retail investors to buy up to $1 billion in local corporate bonds in its latest move to bolster capital inflows and support the shaky rupee.
The partially convertible rupee closed at 55.67/68 per dollar, 0.9 percent below its close of 55.1850/1950 on Monday. The unit had hit a series of record lows over the previous two sessions, culminating in a lifetime low at 56.40 on Thursday. The one-month non-deliverable forward rate was quoted at 56.09, while the three month was at 56.78. 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 all ended around 55.9450 on a total volume of $4.8 billion.
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