Rupee dips to near 9-month low on dollar outflows

MUMBAI: Rupee weakened in early trade on Monday to levels not seen in nearly nine-months due to bunched up dollar outflows following a local forex market holiday on Friday.

Shares had fallen nearly 2 percent last Friday to log their fourth straight weekly loss, their longest weekly losing streak since the Lehman collapse in 2008, as fears of United States sliding into a recession triggered a safe-haven flight globally.

At 9:12 a.m. (0342 GMT), the partially convertible rupee was at 46.08/09 per dollar, 0.75 percent weaker from its 45.735/745 close last Thursday.

According to KN Dey,Director, Basix Forex & Financial Solutions rupee is expected to trade in the range of 45.70-46.30 to the dollar in the ensuing week.

Forward Dollar Premia might remain under pressure in the coming week as US dollar shortage is likely to persist both in the domestic markets and global markets.

Equity indices have lost more than 4% during the week. FIIs have been net sellers last week and markets have seen a net outflow of $1.7 billion in the current month and in the calendar year, the net investments have come down to $4.5 billion.

The volatility is here to stay for some more time. Markets are looking ahead to Fed chairman Bernanke's speech at Jackson Hole on August 26.