Rupee falls to 5-mth low, trade data hurts
By Saikat Chatterjee
MUMBAI (Reuters) - The rupee dropped to its lowest level in five months on Monday as a sell-off in the stock markets heightened fears of capital outflows, while January trade data showed the deficit more than tripling from a year ago.
The partially convertible rupee ended at 40.39/40, its lowest finish since Sept. 18, and down 1 percent from Friday's close of 40.01/02.
It was the biggest single-day percentage fall in four months.
"The outlook is bullish for the dollar in the near-term as importers are covering their positions and the party seems to be over for the stock markets," said R.A. Sankara Narayanan, head of currency trading at state-run Bank of India.
The local stock index fell more than 5 percent, its biggest percentage fall in six weeks, triggering a wave of short-covering on dollar positions by foreign and private banks.
Capital inflows were a key driver of the local unit when it rose more than 12 percent. Foreigners have sold about $3 billion worth of stocks so far in 2008 after buying $17.4 billion in 2007.
The rupee has fallen more than 2 percent so far in 2008.
The rupee is unlikely to appreciate as sharply this year as last year, when its gains were "extraordinary", India's finance minister told Reuters. Continued...
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