Dollar gets its bang back, pushes rupee down to 1-yr low

Mumbai: The rupee fell to a near 1-year low on Thursday dragged by dollar demand from domestic oil companies and weak Asian currencies, with choppy equities also weighing.

At 10:20 a.m. (0450 GMT), the partially convertible rupee was at 46.19/20 to a dollar, after hitting 46.2650 - a level not seen since September 16, 2010.

The unit had declined 0.1 percent on Wednesday to end at 46.1670/1750. “Oil (dollar demand) is sizzling again and shares are also volatile. So, some weakness was expected. But the fall should be capped around 46.30 levels due to exporters,” said a foreign exchange dealer with a state-owned bank.

[caption id=“attachment_78965” align=“alignleft” width=“380” caption=“Oil is India’s biggest import item and domestic refiners are the largest purchasers of dollars in the local forex market. Reuters”] [/caption]

Oil is India’s biggest import item and domestic refiners are the largest purchasers of dollars in the local forex market.

Brent crude was above $115 a barrel, after a $3 surge in the previous session, in line with a rebound in equity markets as a ruling by a top German court helped assuage fears that euro zone bailout efforts might get stalled.

But the euro slipped versus the dollar in Asia and faces headwinds from suspicions that Europe’s efforts to fix its debt crisis may not be fast enough to keep markets happy.

The euro was at $1.4061, only slightly above $1.4051 at the end of rupee trade on Wednesday, while the index of the dollar against six major currencies was at 75.601 points from 75.554 previously.

The BSE Sensex was up 0.1 percent, but had turned negative after opening 0.4 percent higher. The 1-month onshore forward premium was at 13.50 points from 12.75 on Wednesday, the three-month at 41.25 points from 40 and the one-year at 131.50 points from 132.

The one-month offshore non-deliverable forward contracts were quoted at 46.37, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 46.2825. The total volume was at $919 million.

Reuters