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Thursday November 26, 06:40 PM
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Rupee falls from 1-wk highs as stocks fall
By Anurag Joshi
MUMBAI (Reuters) - The rupee tumbled from a one-week high on Thursday as debt problems in Dubai hit the stock market, boosted the dollar and raised concerns that risk aversion may temper foreign inflows.
The partially convertible rupee ended at 46.44/45 per dollar, off an early peak of 46.1350 which was its strongest since Nov. 17 and weaker than Wednesday's close of 46.21/22.
"The stock market's sharp fall hurt sentiment. The market would be closely watching the Dubai developments," said a senior trader with a foreign bank who thought the impact would be temporary.
The benchmark BSE (^BSESN : 16034.49 -7.69
) share index fell 2 percent, the most in more than three weeks, as debt problems in Dubai weighed on global stock markets.
Foreign portfolio buying of about $15.3 billion of stocks this year has helped the rupee rise nearly 13 percent from a record low of 52.2 in early March.
Some emerging economies have taken steps to curb inflows of hot money into their economies, but Indian officials have said they would not follow suit as the country needed investment.
India can absorb $100 billion of capital inflows, nearly double what is expected this year, before it needed to take strong restrictive measures, C. Rangarajan, chairman of the prime minister's Economic Advisory Council, told Reuters on Tuesday.
The dollar's recovery also weighed on the rupee. The dollar bounced back from a 14-month low versus the yen as the Dubai concerns hit global risk appetite.
One-month offshore non-deliverable forward rupee contracts were at 46.48/58, close to the spot rate.
In currency futures, the most traded near-month contracts on the National Stock Exchange (^NSEI : 4781.25 -11.4) and MCX-SX were at 46.54 on both exchanges, from Wednesday's 46.24.
(Editing by John Mair)
(For more news on Reuters Money visit http://www.reutersmoney.in)
