Business | Economy
Indian rupee slides on dollar supply concerns
The Indian rupee fell yesterday, ending a two-day rally as dollar buying by oil importers and a shaky stock market raised concerns of a possible dollar shortage in the market.
- Reuters
- Published: 00:11 June 4, 2008
Mumbai: The Indian rupee fell yesterday, ending a two-day rally as dollar buying by oil importers and a shaky stock market raised concerns of a possible dollar shortage in the market.
The partially convertible rupee ended at 42.60/61 per dollar, half a per cent weaker than Monday's close of 42.40/41.
The rupee is down 7.4 per cent in 2008, and analysts expect the central bank will maintain recent efforts to support the currency, including through market intervention on falls beyond 43 per dollar.
One-month offshore non-deliverables forwards were quoting at 42.65/42.75, slightly weaker than the onshore rate.
Demand conditions
"Demand conditions for the dollar-rupee are still heavy and until there is further clarity on the central bank's move on oil companies, the pair should trade in a broad 42.20-42.90 band," said Indrajit Sengupta, chief dealer at state-run Canara Bank.
The central bank said on Friday it would provide foreign exchange to oil refiners against their oil bonds, a move analysts said would lessen dollar demand in the market.
The decision was a key factor in the rupee's rise on Monday to 42.15, its highest since mid-May.
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