Rupee at 1-year low as oil, stocks weigh

MONEY VALUE: A lack of dollar inflows into the stock markets worked against the rupee.

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New Delhi: The rupee weakened to a one-year low of $41.79 per in early trade as oil companies continued their strong dollar demand.

A lack of dollar inflows into the stock markets also worked against the rupee on Thursday.

But the domestic market, the currency moved off these lows, as some banks booked profits and exporters sold at weaker levels. The currency finally closed at 41.77.

Talking about the rupee value ICICI Bank's MD & CEO K V Kamath said that dollar flows into the stock markets would be one of the main triggers for the currency in the short term.

"The rupee is reflecting the uncertainties which have been indicated and analysed in the policy statement," Reserve Bank of India Governor Y V Reddy said.

The currency's fall has raised concerns of a widening trade deficit. The rupee ended at 41.36/37 on Wednesday.

"The trade deficit may marginally deteriorate from consensus estimates and the current account deficit may also marginally deteriorate this year, but this will be comfortably financed by capital inflows," Reddy added.

"The current account deficit will be in the range of what the central bank wants." Firm oil prices and robust domestic demand boosted India's imports by 27 percent to $235.91 billion in 2007/08, and widened the trade deficit for the fiscal year by 35.5 percent to $80.4 billion, from $59.32 billion the year before.

(With inputs from Reuters)