Tuesday, June 15, 2010
Rupee edges down as shares choppy; dollar eyed
Indian Rupee edges lower due to choppy start to domestic share market and dollar gains
Mumbai: The Indian rupee retreated on Tuesday from the previous session’s two-week high as choppy shares failed to provide clarity on fund flows, while the dollar’s gains against major currencies also weighed.At 10:35am, the partially convertible rupee was at Rs46.65/66 per dollar,0.35% weaker than Monday’s close of Rs46.4850/4950 when it hit 46.40 during trade, its highest since 31 May.
“There is a little profit taking after the big move over the last week. INR will remain in a tight range now. I guess Rs46.25 to 47.25 should hold with advance tax numbers out this week,” said Nitesh Kumar, an inter-bank dealer with Development Credit Bank.
“A large part of the equity market expectations will be met which may lead to profit booking,” he added.
Companies in India pay quarterly taxes this week and higher payments would suggest expectations of better profits.
The main stock index was trading down 0.2%, in line with weak Asian peers, as Moody’s downgrade of Greece’s debt hit investor sentiment.
Foreign fund moves into and out of the sharemarket are a key determinant of the rupee’s fortunes. So far in June, foreigners have bought a net $358 million worth of shares, after dumping around $2 billion in May.
The funds are net buyers of about $5 billion in 2010.
Dealers said they would also watch the dollar’s moves versus major currencies for cues. The index of the dollar against six major currencies was 0.24% higher.
Most Asian currencies also dropped versus the dollar.
The euro’s rally showed signs of fading on Tuesday, with investors taking profits and sentiment towards the single currency staying fragile as debt worries returned after Moody’s cut Greece’s credit rating to junk grade.
One-month offshore non-deliverable forward contracts were quoted at Rs46.79, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at Rs46.72, with the total traded volume on the two exchanges at about $1.2 billion.
Reuters
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