The rupee slipped on Friday as importers stepped up buying of dollars, with the currency set to register its steepest annual fall in at least a decade.
A lower-than-normal number of market participants on the last trading day of 2011 also kept up pressure on the rupee, although traders said the currency could recover a bit if exporters move to book year-end profits.
Expectations that the Reserve Bank of India will intervene near closing time to shore-up the currency, as it is suspected to have done on Wednesday and Thursday, could also keep a check on the slide during the day, traders said.
At 11 am (0530 GMT), the rupee was at 53.20/21 to the dollar, down 0.2 percent from Thursday’s close of 53.07/08 with most traders expecting a range of 53.00 to 53.35.
In the previous session, the rupee rebounded from a low of 53.51 on suspected RBI intervention.
“The rupee has already touched record lows and so exporters may look to cash-in at the year-end, while importers will try to hedge against further weakness,” said a foreign exchange trader at a state-owned bank. “Therefore, a choppy market will be the theme of the day.”
The rupee is down 16 percent this year. It is also the worst performer among major Asian peers in 2011.
The BSE Sensex, which is among the worst performers this year, was up 0.5 percent.
One-month offshore non-deliverable forward contracts were quoted at 53.72, indicating more weakness was likely in the spot rate in the short-term.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were trading around 53.53, with the total volume at $633 million.
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