The Indian rupee fell to its lowest level in 2-1/2 months on Wednesday as a dollar shortage in the market and concerns about foreign funds selling stocks prompted banks to sell the local unit. The partially convertible rupee ended at 39.76/77 per dollar after falling as far as 39.8950 in afternoon trade, its lowest since November 27.
The rupee had closed at 39.66/67 on Tuesday. "We've seen quite a lot of activity today, with supplies from the stock market reduced and importers buying dollars ... in addition to a lack of dollar supplies," said Rohan Lasrado, head of foreign exchange trading at HDFC Bank.
Foreign funds bought more than $17 billion of stocks last year, a key driver of the rupee's rise of more than 12 percent in 2007. But the funds have sold more than $3.5 billion so far this year as weak global markets heighten risk aversion.