Rupee may weaken on risk aversion fears

Enlarge Photo A man uses an electronic machine to check an Indian currency note at a money...

Tue, Jun 3 08:59 AM

MUMBAI (Reuters) - The Indian rupee may ease on Tuesday as weak Asian stocks raise concerns that foreigners may pull out more of their portfolio holdings from India.

* Foreign funds have sold more than $3.9 billion of Indian shares so far this year, knocking the rupee down 7 percent since the beginning of January. In 2007, they had bought $17.4 billion and helped the rupee rise 12.3 percent.

* The main share index fell 2.15 percent on Monday, its biggest single-day fall since early April, after a delay in an expected agreement to raise state-set fuel prices sparked market talk there was a rift within the ruling coalition.

* The partially convertible rupee ended at 42.40/41 per dollar on Monday, a shade stronger than Friday's close of 42.45/46. It hit a two-week high of 42.15 in intraday deals, a level it last traded on May 14, according to Reuters data.

* Japan's Nikkei average fell 1.5 percent on Tuesday, hurt by overnight losses on Wall Street and with exporters such as Honda Motor Co Ltd hit by a stronger yen.

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