Re closes weak as risk aversion hits stocks

The rupee edged slightly lower on Friday weighed by late losses in local stocks which raised concerns about sustained risk aversion in global markets ahead of a key speech by Federal Reserve chairman Ben Bernanke.

The partially convertible rupee closed at 46.89/90 per dollar, slightly weaker than its 46.84/85 close on Thursday, and 0.3% lower on the week. It moved in 46.8150-46.9525 band during the day.

“On the rupee front, there are mixed signals on fundamentals, hence it is tracking the euro/dollar with a bit of traction with stock market moves. It is going to be sideways trading within 46.65-47.15 band in the near-term,” said J Moses Harding, head of global markets at IndusInd Bank.

“I don’t give much weight to what Bernanke is going to spell out as nothing new is expected. The economy is weak and will take more time for turnaround. The government will extend stimulus support and keep rates low, what more to expect from him?”

The yen dipped against the dollar and the euro on Friday as a nervous market trimmed long positions and Japan’s prime minister reiterated a threat to take steps to stem the currency’s steady rise.

Prime Minister Naoto Kan said he would take firm action on currencies when needed and that he would meet Bank of Japan governor Masaaki Shirakawa when the central bank chief returns from an overseas trip. The index of the dollar against six majors was little changed when the rupee market closed.