RTRS: Indian rupee pares losses; US discount rate hike weighs
* U.S. Fed raises discount rate to 0.75 pct from 0.5 pct
* Move drags down Asian stocks, currencies
* Rupee seen between 46.35-46.55 per dollar
(Updates to mid-morning)
MUMBAI, Feb 19 (Reuters) - The Indian rupee pared losses on Friday after hitting a one-week low in early trade, weighed down by lower domestic shares and a stronger dollar after the U.S. Federal Reserve raised a key lending rate.
At 11:21 a.m. (0551 GMT), the partially convertible rupee INR=IN was at 46.4275/4300 per dollar, after hitting 46.48, its lowest since Feb 11. It had closed at 46.27/28 on Thursday.
An irregular 47.35 rupees-per-dollar trade was reported early, the lowest level for the Indian currency in more than 3-½ months, which was soon rectified.
"The rupee opened quite weaker and there's no real reason for it to appreciate, but a lot of inflows are coming in and that is supporting the rupee," said Naveen Raghuvanshi, an associate vice president at Development Credit Bank.
Traders said the inflows could be related to the $754.4 million share sale in India's state-run Rural Electrification Corp (RURL.BO). [ID:nSGE61H0D7] The rupee should be in the 46.35-46.55 range as more dollar purchases later in the day, after European stocks open, will likely act as a drag on the rupee, said Madhusudan Somani, head of foreign exchange trading at Yes Bank.
Indian shares were trading down 0.96 percent, while their Asian peers too were hit by the U.S. move, with most trading weaker against the dollar on Friday. See [EMRG/FRX] for a snapshot.
The dollar rose and the euro hit a nine-month low on Friday after the Federal Reserve said it was raising the interest rate it charges banks for emergency loans, stoking expectations it is moving towards normalising monetary policy.
The dollar index rose to its highest in eight months, but later trimmed gains after Fed officials said the move was not a precursor to a rise in the benchmark rate and the market was putting too high a probability on a rate increase this year.
The index of the dollar .DXY against six majors was up 1.01 percent.
One-month offshore non-deliverable forward contracts PNDF were quoting at 46.42/45, little changed from the onshore spot rate.
In the currency futures market INRFUTURES, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both quoting at 46.4375, with the total traded volume on the two exchanges at about $1.33 billion. (Reporting by Jeanette Rodrigues; editing by Malini Menon)
