INR slips to 8 week low

The rupee weakened in afternoon trade towards eight-week lows on Friday tracking the domestic share market which dropped more than 2 percent and on sharp overseas gains in the dollar versus majors.(read budget highlights).

The dollar index, a gauge of the U.S. unit's performance against majors, was up 0.7 percent.

FII'S have bought about $1 billion of stocks so far this month, taking net inflows in 2009 to nearly $6 billion, a key factor in its rise from a record low of 52.2 in March.

In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX were quoting at 48.9350 and 48.93 respectively, with the total traded volume on the two exchanges at about $1.26 billion.

INR falls 39 paise against US $

Indian rupee closed above the crucial 48 level against the dollar for the first time in five weeks in tandem with a sharp slide in local stocks, raising fears of capital outflow from equity.

Resuming lower at 47.84/85 a dollar, the domestic unit later moved in a range of 48.16 and 47.81 before ending the day at 48.13/14 against the dollar, cheaper by 39 paise from its last close of 47.74/75 a dollar.

Dealers at the Interbank Foreign Exchange (forex) market said continued capital outflows in the week weighed on rupee sentiment.

Foreign institutional investors pulled out nearly USD 193.60 million in the last two days. They were believed to be heavy sellers in equity today.

The Indian benchmark Sensex plunged by 435 points or 2.91 per cent following dramatic sell-off by foreign funds.

Meanwhile, the dollar, which was buoyant in the overseas market in the last few days, was little changed against the basket of currencies.

Rupee turns stronger gains 52 paise v/s US $

The rupee had fallen to a one-month low of 49.28 against the dollar in early trade after the scandal in India's fourth-largest software exporter Satyam Computer sparked fears about capital outflows.

Resuming weaker at 49.20/21 a dollar from its previous close of 48.80/81 a dollar, the rupee later fluctuated between 48.28 and 49.28 during the day, partly influenced by movements in local stocks.

Dealers at the Interbank Foreign Exchange (forex) market said foreign and private sector banks heavily sold dollars in the latter part of the day amid reports that foreign investments may not be affected in the aftermath of the country's biggest corporate fraud. Leading fund managers reportedly ruled out the possibility of any capital outflow because of the Satyam scandal.

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Despite the dollar's firmness against major world currencies in global markets, they said a sudden bout of dollar sales led a strong recovery in the rupee, which was under pressure in early trade due to weakness in equity markets.

The rupee also drew support from the absence of any dollar demand from oil refiners during the day.

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