Mumbai: The rupee dropped to a record low on Friday on heavy dollar demand from oil refiners to meet import commitments while arbitrage play between the onshore and offshore markets also weighed.
At 1005 hrs IST, the partially convertible rupee was at 50.75/77 per dollar, after hitting 50.78, down 0.6 per cent from its Thursday's close of 50.45/47. It has lost 4 per cent this year.
"The market is one-sided, there is heavy dollar demand from oil refiners and the non-deliverable forward rates are also higher, so there is some arbitrage opportunity as well," said chief dealer at state-run Corporation Bank, Sudarshana Bhat.
He said there was support for the dollar-rupee at 50.50 and resistance around 50.70. However, he said the rupee could weaken past 51 soon.
Other dealers said they expected the Reserve Bank of India (RBI) to intervene by selling dollars to cap any sharp fall in the rupee. One-month offshore non-deliverable forward contracts were quoting at 50.97/51.07, weaker than the onshore spot rate.
Banks generally buy dollars locally and sell them in the offshore market to profit from the difference in the two prices, weakening the rupee in the local market. Stocks would be watched for direction, dealers said.
The main stock index fell 0.6 per cent early as investors awaited December quarter economic growth, which is forecast to have slowed to a four-year low due to the global financial crisis. The data is due at 1100 hrs IST.
Foreigners have dumped about $1.6 billion worth of Indian shares in 2009, after having sold more than $13 billion last year when the rupee fell 19.1 per cent.
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