Rupee At 5-Month Low On Dollar Crunch, Global Risk

MUMBAI: Rupee fell to a five-month low on Wednesday, as dealers sold the local unit aggressively to meet dollar demand from overseas investors who withdrew some funds on concerns about the global economy. At 10:10 am, the partially convertible rupee was at 40.065/075 per dollar, down from its previous finish of 39.91/92 per dollar.

It had last traded at 40 per dollar on Sept 20. "It's hard to meet the demand for dollars at the moment, especially with no real inflows, which is putting a lot of pressure on the rupee," said the chief dealer with a corporate.

Sensex fell more than 1 per cent in early deals on Wednesday, taking cues from weak Asian equities, with Japan's Nikkei average falling more than 2 per cent, as investors locked in profits amid economic concerns.

Markets were cautious after oil prices surged to a record high above the $100 mark, which sparked fears of higher inflation in a US economy already struggling with the credit crisis. A dealer said demand for dollars from an oil company put further pressure on the local unit.

Oil is India's largest import, and rising crude prices usually exert downward pressure on the rupee. Some dealers said that the rupee's losses would be capped around 40.25 by exporters, who would likely sell their dollar holdings at around those levels.

"Exporters understand that the rupee is going to move down before it moves up again, and they're going to wait for a while for the best rate," said a dealer with a foreign bank.

Equities Seen Flat-To-Higher On Positive Global Cues

MUMBAI: After a day of utter pandemonium on Dalal Street, the market looks at positive global cues Tuesday to offer some solace. Wall Street finished higher in a volatile session on Monday as retail and homebuilders stocks rose on expectations for more interest rate cuts, but banks and insurers fell on worries about further mortgage debt troubles. The Dow rose 0.48 per cent to 12,240.01, Standard & Poor's 500 Index rose 0.59 per cent to 1,339.13 and the Nasdaq Composite Index rose 0.66 per cent to 2,320.06.

Asian shares edged higher with Japan’s Nikkei up 0.12 per cent, Hong Kong’s Hang Seng gaining 1.65 per cent and Singapore’s Straits Times rising 1.22 per cent. On Monday, Indian shares plunged weighed by the weak debut of Reliance Power battering already cautious sentiment firmly down.

National Stock Exchange's Nifty ended at 4857, down 5.14 per cent or 263.35 points after swinging 323 points during the day. The index touched a high of 5,126.40 and low of 4,803.60.

Bombay Stock Exchange's Sensex closed at 16,630.91, down 833.98 points or 4.78 per cent. The index swung over 969 points intraday between a high of 17,427.34 and low of 16,457.74. Foreign institutional investors were net sellers of equity worth Rs 1,268.67 crore, while mutual funds net sold Rs 22.27 crore of equity, according to provisional data on NSE.