MUMBAI (Reuters) - The rupee rose on Wednesday, rebounding from a seven-month low touched earlier in the session as investors saw recent losses as overdone, even as caution prevailed ahead of an extended holiday.
The rupee opened weaker at 61.95, a level last seen on March 4, but steadily regained some ground. The unit fell in both the previous sessions, dragged down by a global rally in the dollar due to worries about earlier-than-expected U.S. rate hikes.
Still, the rupee fell 0.75 percent for the week, its biggest loss since the trading week ended on Aug. 1, which was also marked by gains in the dollar. It was also the rupee’s fourth consecutive weekly fall.
Markets will be shut from Thursday to Monday and re-open on Tuesday at a time of caution in emerging markets, with the civil unrest in Hong Kong also weighing on sentiment.
“It’s more of a dollar-strong story than a rupee-weak one,” said Harihar Krishnamoorthy, treasurer at First Rand Bank in Mumbai.
“Having said that, it is clear that as the rupee approaches the 62 level, we are seeing increased dollar selling from traders. The rupee has lost much less than its emerging market peers in recent sessions.”
The partially convertible rupee ended at 61.61/62 per dollar compared with Tuesday’s close of 61.7450/7550.
Besides global factors, traders said the rupee could be impacted by the start of corporate earnings late next week, which could lead to volatility in share markets.
In the offshore non-deliverable forwards, the one-month contract was at 61.99/62.09, while the three-month was at 62.60/70.
Reporting by Mumbai Treasury Team; Editing by Prateek Chatterjee