Rupee weakens along with Asian peers

03 May 2010

1

As anticipated by traders, the rupee weakened on Monday in line with its Asian peers and on an expected lower opening in domestic shares. Most Asian currencies weakened against the dollar on Monday.

The weaker rupee came after a three-session rally as risk aversion picked up across Asia and the dollar's broad gains versus major currencies and other regional peers added to the local unit's woes. At 10:30 am IST, the partially convertible rupee was at 44.57/58, half a per cent lower than 44.36/37 at close on Friday.

China on Sunday raised the proportion of deposits that lenders must keep in reserve at the central bank, another step in its months-old campaign to mop up excess cash in the economy at a time when inflation is on the rise.

"The INR is weaker on global soft equities and bit of risk aversion. Not much of direct impact of China's RRR hike, even within China," said Ananth Narayan G, head of rates and credit in South Asia region at Standard Chartered Bank.

"However, this and questions relating to the Greece package adds to the overall sense of uncertainty in markets," he added, predicting a range of 44.50-44.65 for the session.

The euro fell on Monday, resuming its slide towards recent one-year lows, as fiscal worries about the broader euro zone returned and the initial relief from a bailout package for debt-stricken Greece fizzled out.

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