The Hindu Business Line : Rupee weakens further

The rupee weakened further against the dollar on Friday due to all-round demand for the dollar and the weak stock market. Market participants are buying dollars in the spot market and selling in the non-deliverable forward market to take advantage of the arbitrage between the values (dollar and rupee). There was also demand from corporates, said forex dealers. The rupee opened at 45.65 and touched a low 45.80 during day trade. It rose to 45.52 on better than expected indus trial data. However, it later weakened to close at 45.74. According to the chief forex dealer with a private bank, the Reserve Bank of India was seen intervening at various levels, but it had not been effective in bringing massive strength. It has only prevented the rupee from falling sharply. “The rupee looks fundamentally weak given the inflation levels and the lack of inflows,” he said.

Next week the rupee may be range-bound, with more weakness likely. The rupee crossing 46 cannot be ruled out, the dealer added.

In the forward premia market, the six-month closed at 2.54 per cent (2.94 per cent) and the 12-month at 2.08 per cent (2.55 per cent). –

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