Rupee trend remains weak

The rupee closed marginally higher than its previous close, but the trend continued to be weak due to concerns such as a decline in industrial production and an increasing current account deficit. The fall in the equity market added to the negative sentiments, said dealers.

The rupee was expected to open weaker on Friday, as it had closed at 50.17, a 30- month low on the last trading session on Wednesday, said dealers. The domestic currency opened weaker at 50.35 and touched 50.42. But it gained to 49.96 on dollar inflows, within the first half hour of trade.

However, choppy dollar supply saw the rupee end at 50.11, marginally higher than Wednesday's close.

RBI doesn't intervene

The RBI did not intervene in the market as supplies from exporters and drawals from corporates which have contracted external commercial borrowings are matching the demand, said dealers. “In any case the RBI is only concerned with containing the volatility of the rupee and will not try to reverse the trend,” said a forex dealer with a private sector bank.

India's industrial production data for September showed a growth of 1.9 per cent from last year, a two-year low.

According to bankers it is risk aversion which is driving investors towards safe haven currencies such as the US dollar. And that is why the rupee trend appears to be weak.

Europe concerns

In the overseas market the euro recovered from a month's low against the dollar seen last week. But Europe still remains a concern due to the problems in Greece and Italy, said the treasury head of a public sector bank.

“If demand for Indian exports from Europe decreases, that would further add to exporters' problems. But our country's export to Europe is only 18-19 per cent. The rupee is likely to remain weak for at least a couple of more weeks and trade between 49.50 and 50.50,” he said.

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