| MUMBAI, July 23
MUMBAI, July 23 The Indian rupee on Monday fell
the most in a month as risk assets got pummelled, sending the
euro sharply lower against multiple currencies, although the
local unit found support from large dollar sales by a
Fears Spain will have to seek a full sovereign bailout,
coupled with mounting worries that Greece may leave the euro,
sent the euro sliding to a two-year low against the dollar and a
near 12-year trough against the yen on Monday.
Some doubts about whether the government can deliver on
policy reforms after presidential elections last week also
appeared to dent investor confidence, contributing to a steep
1.6 percent drop in the main BSE stock index.
Media reports that government coalition members
Samajwadi Party and leftist parties are opposed to opening up
foreign investments into multi-brand retail outlets sparked a
sell-off in retailers.
"The market is basically tracking the euro story. However,
56 should cap the current bout of rupee weakness. Going forward,
RBI will intervene if it goes out of hand," said Satyajit
Kanjilal, chief executive at Forexserve, a forex risk advisory
The partially convertible rupee closed at
55.9650/9750 per dollar, as per the SBI closing rate
, weaker than its close of 55.32/33 on Friday.
It fell 1.2 percent during the session, its biggest fall
since June 22.
A bigger loss for the rupee was capped after a private
petrochemical company was spotted heavily selling dollars in the
session, several dealers said.
The rupee could face strong technical support at 56.11, the
61.8 percent Fibonacci retracement of the rupee's gains from a
record low of 57.32 on June 22 to the monthly high of 54.18 hit
Beyond the euro, a lack of policy reforms could most hinder
the rupee, given a large part of the rupee's recovery since it
hit its life low of 57.32 on June 22 has been driven by hopes
the government would tackle action to reduce its fiscal deficit
and attract foreign investment.
The one-month offshore non-deliverable forward contracts
were around 56.39 while the three-month was at 57.05.
In the currency futures market, the most-traded near-month
dollar-rupee contracts on the National Stock Exchange, the
MCX-SX and United Stock Exchange all closed at around 56.05 with
the total traded volume at around $5.5 billion.
(Editing by Rafael Nam)