Rupee At Its One-Week Low

Mumbai: The Indian currency dropped to a one-week low on Tuesday, weighed down by weaker Asian stock markets and oil prices that lingered near all-time highs.

Volume was unresponsive as market dealers expected the result of a U.S. Fed Reserve meeting where it is widely tipped to lower its federal funds rate by 25 basis points to 5%, but a few market analysts are anticipating a deeper cut.

In early trading, the partially convertible rupee weakened to 40.60/61 per dollar from 40.56/57 at Monday's close. In July, it hit a nine-year high of 40.20.

Vikas Babu, a currency dealer at Andhra Bank, said, “Global indicators such as stocks and oil prices are not looking very positive and the rupee is mirroring that.”

Oil prices ascended to an all-time high of $81 per barrel today on worries of a winter supply squeeze. Prices have climbed from about $60 from the start of 2007, and JP Morgan anticipated that for every $10 rise in oil costs, it rises annual oil import bill by $7 billion.

Asian stocks fell as financial shares lost ground amid worry about dispersing agitation in credit markets.

"It looks to be a 40.55-40.68 band before the Fed decision," Mr. Babu added.