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Friday November 20, 10:10 AM
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Rupee off 1-wk lows as exporters sell dlrs
MUMBAI (Reuters) - The rupee dropped to fresh one-week lows on Friday, tracking a stronger dollar overseas and as traders braced for a lower start to local shares, but exporters sold dollars to cash in on the rupee's fall.
At 9:42 a.m. (0412 GMT), the partially convertible rupee was at 46.56/57 per dollar after hitting 46.75, which was its weakest since Nov. 13. It had closed at 46.6850/6950 on Wednesday.
"The initial drop was tracking global equity markets and the dollar's strength, but 46.75 level was a decent technical support for the rupee, which prompted exporters to come and sell dollars around there," said a senior dealer with a private bank.
The dollar and yen kept their broad strength on Friday as investors continued to sell higher-yielding currencies and took profits from gains made in the past few months in risky assets.
Traders said they would be watching the domestic sharemarket open for cues on capital flows, which have been a key influence on the currency in recent years.
At 0412 GMT, the MSCI index of Asian stocks ex-Japan was down 0.6 percent while the Nifty (^NSEI : 5245.9 +14
) India stock futures traded in Singapore dropped 0.5 percent, both suggesting a lower open in the local market.
Foreign portfolio investments of nearly $15.4 billion in 2009, have helped the rupee recover from a record low of 52.2 touched in early March.
"India's high growth economic model results in persistent current account deficits instead of surpluses. This does not mean that INR cannot appreciate," DBS Group Research said in a note, referring to the rupee.
"It just means that appreciation will depend more on capital inflows, especially foreign investments, both direct and portfolio."
Economists say India is unlikely to follow Brazil and impose a tax on inflows, as that could drive away foreign investors and hurt Indian companies.
Finance Secretary Ashok Chawla said on Thursday India was not planning to cap overseas borrowing by corporates.
One-month offshore non-deliverable forward contracts were quoting at 46.60, marginally weaker than the onshore spot rate.
(Reporting by Swati Bhat; Editing by Ranjit Gangadharan)
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