At 11am, the partially convertible rupee was at 48.29/30 per dollar, 0.4% weaker than its Thursday’s close of 48.11/12 Reuters Email Print del.icio.us digg newsVine font size Mumbai: The Indian rupee dropped on Friday, tracking overnight gains in the dollar versus major currencies and a choppy start to the domestic share market that failed to provide clarity on direction of foreign fund flows. At 11am, the partially convertible rupee was at 48.29/30 per dollar, 0.4% weaker than its Thursday’s close of 48.11/12. “The tax code and global cues pulled up the rupee yesterday, but overnight, the U.S. dollar has gained against major currencies as U.S. retail sales came in poorer-than-expected and the risk aversion overshadowed risk appetite factor,” said V. Kumar, chief foreign exchange trader at state-run State Bank of Travancore. “Today’s expected range is 48.15 to 48.40. The weak monsoon situation coupled with the swine (flu) effect should pull down the rupee, after the tax code effects subside,” he said. India proposes to reform its archaic tax laws, phase out exemptions, simplify rules on corporate mergers and help improve compliance, finance minister Pranab Mukherjee said on Wednesday. India’s monsoon rains were 56% below normal over the past week, government data showed on Thursday, painting an increasingly grim picture for the farm sector and fuelling talk of a full-blown drought. Other dealers said the stock market would be closely watched for clues on foreign fund flows. Indian shares made a shaky start as poor monsoon rains and mixed Asian peers weighed on investor confidence, a day after the market rallied 3.3% to its best close in more than a week. Foreign funds have bought a net $7.4 billion of Indian stocks in 2009 after having sold more than a net $13 billion last year. One-month offshore non-deliverable forward contracts were quoting at 48.33/43, marginally weaker than the onshore spot rate.

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