Indian Rupee falls to 17 month low

The rupee fell to its lowest in 17 months on Monday, hit by a weak stock market and some lumpy orders in a holiday-thinned market that was also factoring in some recent dollar strength.

The partially convertible rupee ended at 43.59/60 per dollar, recovering slightly from an intraday low of 43.70, its lowest level since March 29, 2007.

The rupee fell 1.33 per cent from Thursday’s close of 43.01/02, its biggest percentage fall in a year. It has fallen by 3.5 percent in the last five sessions and is down 9.6 percent in 2008. It rose more than 12 percent in 2007.

Markets were closed on Friday and will shut again on Tuesday for local holidays, which means many trading rooms were thinly staffed. Trade was volatile with the rupee trading a 43.05-43.70 band, and traders said there was heavy dollar buying by a large manufacturing company around 43.50 per dollar.

“This sharp fall looks like some stop-losses have got triggered and even offshore markets are pointing to a weaker rupee,” said R N Hirve, chief dealer at Central Bank of India. One-month offshore non-deliverable forward contracts were quoting at 43.81/86 per dollar.

The dollar hit a six-month high against the euro on Monday, although it surrendered the gains later in the day. The euro has fallen nearly six percent against the dollar in two weeks on concerns of an economic slowdown.

Speculation the central bank may step in to stop the rupee’s fall proved unfounded. “There was some talk it may intervene around the 43.50 per dollar, but once that level broke conclusively, it fell like a stone,” said a dealer at a state-run bank.  — Courtsey Times of India