Rupee ends off lows after reports of support from the European Central Bank to rebound euro

The rupee clawed back from the day’s low on Monday in choppy trade, after a rebound in the euro on speculation of more support from the European Central Bank, while weak domestic equities prevented a bigger recovery. The local currency ended at 49.445/455 per dollar only marginally weaker than 49.42/43 on Friday when it had touched 49.90 - a level not seen since mid-May 2009. “The main cause of worry is Europe’s debt crisis.

Markets now hope to see concrete action from policymakers to back comforting statements,” said Pramod Patil, senior foreign exchange dealer at State Bank of Mauritius. “Until then, the rupee will continue to see volatility.” The unit moved in a wide band of 49.80 to 49.3250 during trade.

The euro recovered early losses against the dollar on media reports that ECB may consider more measures to support the economy, traders said. The common European unit was at $1.3523 at end of rupee trade versus $1.3453 on Friday, while the index of the dollar against six major currencies was at 78.029 points from 78.502 points previously.

Standard Chartered Bank lowered its short-term rating on rupee to ‘neutral’ from ‘overweight’, citing a deterioration in global sentiment, and predicted the rupee will touch 51 per dollar by end-December.