Rupee weakenes as stocks drop

MUMBAI: The rupee is trading weak with the downswing in stocks and strength in the dollar overaseas souring the sentiment for the local unit. Local stocks came in a for a hammering on Wednesday after China���s stocks plunged the most in eight months on concern this year���s rally had run ahead of prospects for earnings growth.

The rupee traded nearly 20 paisa lower at 48.41 at 1 pm, it had fallen to 48.51 earlier in the day.

"Dollar is gaining strength globally and Chinese stocks weakness is spreading on to the other emerging economies too," said Navin Raghuwanshi, associate vice president with Development Credit Bank.

The dollar index - gauge of the dollar���s movement against six major currencies - was up 0.1% by 1 pm.

Traders made a beeline for safe haven currencies like the dollar as a key consumer confidence trailed projections and some companies posted worse-than-estimated results in US. However US home prices posted their first monthly gain in three years in May, reinforcing signs of stabilization in the real estate market.

Government bonds traded unchanged after the central bank left key rates un-changed, with governor D Subbarao making clear that a ���accomodative��� monetary stance would continue.

The benchmark ten-year yield was flat at 6.89%, with the market gearing for another Rs 12,000 cr bonds auction this week.