Indian rupee hits lowest against dollar since 2003

Mumbai: India's rupee closed above 47 per dollar for the first time since June 2003 on Friday as sharp losses in the share market fuelled concerns of further capital outflows while strong dollar demand from oil firms weighed on rupee sentiment.

The partially convertible rupee ended at 47.0750/0850 per dollar, nearly 1 per cent weaker than 46.62/63 at close on Wednesday, but half a percent stronger than its intraday low of 47.30 hit in early trade, its lowest since May 2003.

The market was shut on Thursday for a holiday.

"Stocks are down by more than 500 points and there is heavy dollar demand from oil companies," said Sudarshan Bhat, chief currency trader with state-run Corporation Bank.

"The rupee should stay in a 47.0-47.50 per dollar band next week," he said.

India's main share index shed more than 4 per cent on concerns the $700 billion US bailout package may not be able to save the global economy from a slowdown. Oil, India's biggest import, was hovering around $94 per barrel.

Dealers said a stronger dollar overseas weighed on rupee sentiment, but dollar sales by some large firms helped the rupee recover.

The dollar on Friday eased from the previous day's searing rally.