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Mumbai, Aug. 9

The rupee was volatile against the dollar on Thursday, taking cues from the stock marke, which lost heavily following news that international bank BNP Paribas has been forced to suspend calculation of the net asset value of three of its mutual funds due to problems in the US subprime mortgage sector.

The domestic currency opened higher at 40.45/46 and strengthened to 40.39/40, due to good dollar inflows. However, following the BNP Paribas news, the rupee fell and closed at 40.52/53, unchanged from Wednesday’s close of 40.52/53. A forex dealer with a private bank said, “When the equity index turned around, some custodial banks turned dollar buyers. The good dollar inflows in the morning, which were contrary to expectation, helped the rupee reduce its losses.” Dealers also fear that the Dow Jones and the US stock market may open weak, which could affect the rupee’s movement on Friday. Oil-related dollar buying on Friday could weaken the rupee. The rupee may trade in the 40.50-40.60 range said the dealer.

In forwards, the six-month premia closed at 1.96 per cent (1.79 per cent) and the 12-month premia closed at 1.94 per cent (1.82 per cent).–

Our Bureau

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