Indian Rupee eases on weak Asia, but losses capped

The rupee eased slightly on Monday, hurt by declines in most Asian currencies on waning prospects of further rate cuts by the US Federal Reserve, though dollar selling by a private-sector bank capped losses. At 9:45 am (0415 GMT), the partially convertible rupee was at 39.35/36 per dollar, just softer than the previous close of 39.34/35 per dollar on Friday, which was its strongest finish since Nov. 19. The rupee hit a near-decade high of 39.16 last month. "The negative cues from dollar-Asia and other equity markets are what people are looking at, but the rupee is not likely to be affected as much as other Asian currencies," said the chief dealer with a foreign bank. Asian shares fell on Monday after surging US inflation and high oil prices fanned concerns the Federal Reserve may be unable to make deeper cuts to prevent a possible recession. Still, dealers said that elevated overnight interbank interest rates would limit the rupee's losses, as banks may pare dollar holdings to tide over tight cash conditions. Call rates were trading at 7.70-7.80 per cent, higher than the 6 per cent when cash conditions are normal. Adding to the tentative mood were concerns India's central bank would block any rapid appreciation in the rupee, which has gained over 12 percent this year. The Reserve Bank of India bought $64.5 billion in intervention in the first 10 months of the year.



Courtesy to
The Economic Times