The Indian rupee ended down but off a two-month low on Monday, helped by gains in the euro, but domestic share losses weighed on the local unit.
Dealers, however, see the rupee weakening further on the back of weak global cues and continued outflow of foreign institutional investor funds.
"The rupee could weaken further quite easily. I don't think there are too many positive triggers," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
He expects the rupee to trade in a broad range of 45.50 to 46.50 per dollar in the near term.
The partially convertible rupee INR=IN ended at 45.90/91, after falling to 46.01, its lowest since Nov. 30. It had closed at 45.7525/7625 per dollar on Friday.
The euro rose against the dollar on Monday as above-forecast euro zone inflation kept alive the view that interest rates in the region may rise sooner than previously thought. [USD/]
The rupee is likely to track domestic shares and global markets amidst continuing negative sentiment, dealers said.
Indian shares on Monday posted their worst monthly fall in more than two years, tracking weak global markets as anti-government protests in Egypt led to risk aversion, with inflation and rate rise fears further dampening sentiment. [.BO]
Emerging Asian currencies fell broadly, with the Thai baht hitting a five-month low. [EMRG/FRX]
Foreign funds were net sellers of $1.19 billion worth of shares this month until Friday, pushing the rupee down over 2 percent. Last year, investments had reached a record $29.3 billion, helping the unit gain 4.1 percent.
In the currency futures market INRFUTURES, the most traded near-month dollar-rupee contracts on the National Stock Exchange was at 46.13 per dollar, MCX-SX at 46.1275 and United Stock Exchange was at 46.1350. Total traded volume was $7.36 billion
Indian rupee ends off 2-mth low; euro strength supports
Tuesday, February 01, 2011
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