Rupee seesaws tracking dollar; weak shares hurt

The rupee seesawed on Friday mirroring the dollar's moves versus major currencies, while losses in domestic shares maintained a downward bias on the Indian unit. At 10:45 a.m. (0515 GMT), the partially convertible rupee was at 46.54/55 per dollar, weaker than 46.49/50 at close on Thursday.

A senior dealer with a private bank said there was early buying after a selloff in the previous session saw the rupee hitting technical stops.

"Now they are tracking the equity market and dollar index," he added. Traders expected the rupee, which has moved between 46.4250 and 46.60 in early trade, to widen to 46.40-46.70. The dollar was on the defensive on Friday on doubts about a recovery in the U.S. economy while short covering and a general wariness towards riskier assets kept the yen near a one-month high against the greenback.

The index of the dollar against six major currencies was seesawing. Most Asian currencies were weaker compared to the dollar.

Domestic shares dropped 0.8 percent, with financials leading the decline, taking cues from weak world markets.

Foreign fund flows into and out of the sharemarket have a key influence on the rupee's fortunes. So far in June, foreigners have bought $1.7 billion worth of shares after pulling out $2 billion in May. They are net buyers of $6.3 billion in 2010.

One-month offshore non-deliverable forward contracts were quoted at 46.79, 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 46.5450, with the total traded volume on the two exchanges at about $1.6 billion.

Source http://economictimes.indiatimes.com/markets/forex/Rupee-seesaws-tracking-dollar-weak-shares-hurt/articleshow/6089450.cms