Mumbai, Feb 23 (UNI) The Rupee was witnessed in weaker position at 40.04/06 against per USD on week ended yesterday compared to 39.66/68 on the previous week, depreciating by about 40 paise amid a volatile session in the local market.
The local unit resumed on Monday with a marginal gap at 39.65 per dollar on fresh inflows in the local equity market in early trade.
But, it lost ground against the greenback as there was a sudden weakening of the Indian markets on selling pressure in the mid-week trade as well as outflows of the foreign funds in the late trade. Moreover, rupee traded in a wide range between 39.65 and 40.08 during the week which ended weaker against the dollar, dealers said.
''The equity markets are the key because they are driving the flow of funds. India's benchmark share index fell more than one per cent in early deals, with concerns about record oil prices and US Economic slowdown keeping investor sentiment cautious. Foreign buying of local equities was a key driver of the rupee's 12.3 per cent rise in 2007.
Fresh evidence that the US economy was in recession sent Asian stocks lower with Tokyo shedding almost two per cent as investors took shelter in the relative safety of government debt. The Dollar hovered near two week lows against the Euro on yesterday after data showed the weakest regional factory activity since the last US recession in 2001 and boosted expectation for a large Federal Reserve interest rate cut. The Federal Reserve said that this week it had lowered its economic growth forecast. The Fed cut its lending rate by 1.25 percentage points in January in an effort to prevent a recession.
Rupee is likely to further drifting lower against USD in coming week on expectation of more cut interest rate for domestic exporters, a leading forex dealer added.
UNI AR GR AG1611