The rupee slipped on Tuesday as local shares fell for the sixth straight day and weaker September exports raised concerns that dollar inflows could slow down if such a trend persists. The rupee ended at 47.40/41 per dollar, off an intraday low of 47.50 and about 0.9% below its previous close of 46.96/97 on Friday. Financial markets were closed on Monday. ?Foreign banks were buying dollars on behalf of overseas funds. Besides, a fall in exports also added to the bearish sentiment for the rupee,? said a senior trader with a foreign bank.
The benchmark 10-year paper, 6.90% bond maturing 2019 closed at 7.23% as against 7.30% on Friday. Indian shares ended 3.1% lower on Tuesday. Foreign portfolio inflows of about $14.2 billion so far in 2009 has been a key support for the local currency, but recent weakness in the equity market has raised worries about their sustainability.
Exports in September fell 13.8% year-on-year to $13.6 billion, a government official said. Trade deficit, however, shrunk to $7.77 billion in the month, and imports fell 31.3% to $21.38 billion.
Traders said a stronger dollar in overseas markets also pressured the rupee. The dollar hit a one-month high against a basket of currencies on Tuesday as investors retreated from risk assets on renewed jitters over banks.
One-month offshore non-deliverable forward contracts were quoting at 47.46/56, weaker than the onshore spot rate. Meanwhile, the g-sec market traded on a buoyant note tracking reported comments from the FM whereby he stated that the domestic growth remained a concern and the exit from current policy would be delayed.