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Rupee falls past 49/dlr as stocks tumble

Fri Jul 10, 2009 6:44pm IST
 
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By Swati Bhat

MUMBAI (Reuters) - The rupee fell back past 49 per dollar on Friday, taking it to its biggest weekly drop in four months as the sharemarket dropped to its lowest since re-election of the government in mid-May.

The partially convertible rupee closed at 49.01/02 per dollar, 0.6 percent below its close of 48.72/73 on Thursday. On Thursday it had traded as low as 49.06, its weakest since May 15, the last trading day before the election results.

The rupee fell 2.3 percent on the week, its biggest weekly loss since early March, when it fell 2.8 percent.

"There was some dollar demand from oil companies and coupled with that the stock market also tanked in the later part of the day, which hurt the rupee," a senior dealer with a private bank said, adding that the close above 49, was bullish for the dollar.

"We will have a large two-way market for the rest of the year now. I reckon a range of 47 to 50. Everywhere things are looking rangebound as markets oscilate between risk appetite and risk aversion," he added.

Dealers said there was strong support for the rupee around 49.30/40 levels while there was a strong resistance at 48.5.

Indian shares fell 1.8 percent on Friday, taking their losses for the week to 9.45 percent -- the biggest weekly fall in more than eight months as concern about the economy kept investors jittery.

Foreigners have pumped in more than $800 million into local stocks in July, taking net inflows in 2009 to nearly $6 billion. The inflows are a significant reason why the rupee is still 6.5 percent above a record low of 52.2 hit in early March.  Continued...

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