The Indian rupee fell to its weakest in nearly a week after the cancellation of coal blocks allocated to companies raised concerns that more coal would be imported, but the currency then recovered to end almost flat for the day on dollar sales from custodian banks. But traders said the six months given to companies to return the coal blocks and the likelihood the government would soon re-auction allocations could prevent the country from resorting to higher coal imports.
"The rupee weakened a bit in a knee-jerk reaction post the coal block verdict but foreign banks and exporters started selling above the 61 mark," said Uday Bhatt, a foreign exchange dealer with UCO Bank. "The rupee will continue to hold in a narrow range, likely 60.75 to 61.25, until September end," he added. The partially convertible rupee ended at 60.96/97 per dollar compared with Tuesday's close of 60.94/95.
Dollar demand from oil and other importers to meet month-end import commitments also pressured the rupee, which fell to as low as 61.07 in late trade, its weakest against the dollar since September 18. The rupee could also remain under pressure ahead of the Reserve Bank of India's policy review on September 30. In the offshore non-deliverable forwards, the one-month contract was at 61.23/33, while the three-month was at 61.80/90.
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