Monday, November 29, 1999

Rupee drops to over 1-week low as shares fall

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The rupee fell to its lowest in more than 1 week on Monday, weighed down by the euro's losses against the dollar and a sharp fall in the domestic sharemarket.At 10 a.m. (0430 GMT), the partially convertible rupee was at 45.67/68 per dollar after hitting 45.73, its weakest since May 7. It was down 1 percent from Friday's close of 45.21/22."The rupee has dropped as expected tracking shares and the dollar's gains versus the euro," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.The main stock index shed more than 2 percent early as world stocks dropped on worries over euro zone debt concerns.Foreign fund flows into and out of the stock market are a crucial determinant of the rupee's fortunes. The funds have pulled out $498 million so far this month, lowering the net inflows since the start of January to just under $6 billion.The index of the dollar against six major currencies was up 0.8 percent. Most Asian currencies were also weaker compared to the dollar.The euro slumped to a four-year low on Monday, as investors dumped the single currency on sovereign debt worries and fears that recent belt-tightening measures would hurt a recovery in the euro zone area.One-month offshore non-deliverable forward contracts were quoting at 45.80, weaker than the onshore spot rate.In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both at 45.6825, with the total traded volume on the two exchanges at about $1.2 billion.(Reporting by Swati Bhat; Editing by Ranjit Gangadharan)(For more business news on Reuters Money visit
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