Rupee falls on news of IT scandal

Mumbai: India's rupee fell on Wednesday as a plunge in the equity market triggered by the country's biggest corporate scandal in memory raised concerns of foreign fund withdrawals, but broad weakness in the US unit limited losses.

The partially convertible rupee closed at 48.80/81 (Dh3.65) per dollar, 0.3 per cent weaker than its previous close of 48.66/69.

"The rupee weakened because of the drop in shares but the slippage in the dollar globally helped," a senior dealer at a private bank explained.

Shares in Satyam Computer Services plunged nearly 78 per cent after the Indian outsourcer said it had overstated profits for many years.

That dragged India's main share index down 7.25 per cent to post its first loss in the new year.

Foreign funds bought a net $167.9 million (Dh616.69 million) worth of shares in the first four trading sessions of the new year, after they dumped stocks valued at more than $13 billion in 2008.

But the scale of the deception at Satyam raised fears corporate governance issues could scare investors away.

The dollar fell broadly yesterday, with its recent run to one-month high's against the euro and yen losing steam.