Indian rupee hits near two-month low

The Indian rupee hit the lowest level in nearly two months on Monday before closing marginally stronger with exporter and corporate dollar sales aiding the recovery, though sentiment continues to remain bearish in the near term. Traders said disappointment over the budget last week is likely to hurt the rupee in the near term with fundamentals such as a record current account deficit likely to keep the downward pressure on the currency.
"Initial weakness in the rupee was due to the budget disappointment. The flows helped the rupee recover despite euro and share weakness, but we may target 55.50 later this week," said Subramanian Sharma, director at Greenback Forex. The partially convertible rupee closed at 54.86/87 per dollar versus its previous close of 54.90/91 on Friday. The unit dropped earlier to a low of 55.15, the weakest since January 8. In the offshore non-deliverable forwards, the one-month contract was at 55.30 and the three-month was at 55.92. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the National Stock Exchange all closed at 55.13 with a total traded volume of $5.9 billion.