Rupee falls to 46.24 as importers step up $ buys

THE rupee weakened on speculation that local importers stepped up purchases of foreign currency to settle month-end bills. The rupee declined as companies with overseas payment commitments probably bought dollars after a key gauge that measures the US currency’s strength rose. The dollar index, used by the ICE to track the greenback against the currencies of six major US trading partners, gained 0.1%.

“The rupee fell because dollar demand from importers is increasing ahead of the month-end ,” said Sudarshan Bhatt, chief currency trader at state-owned Corporation Bank in Mumbai. “It opened stronger on expectations that the government will take steps in the Budget to boost disinvestment.”

The rupee depreciated 0.1% to 46.24 per dollar. Offshore contracts indicate bets the rupee will trade at 46.28 per dollar in a month, compared with expectations of 46.26 on Monday. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.

The rupee had strengthened earlier on speculation that the government will this week announce plans to bring forward sales of public companies , helping draw investment from abroad. Prime Minister Manmohan Singh is stepping up efforts to sell stakes in state-run firms to benefit from the 84% advance in Sensex last year. India can sell shares in as many as 60 companies, according to the finance ministry.