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Indian rupee falls to lowest vs dlr since Dec 2006
* Near-term outlook for the rupee bearish, say traders
* Heavy corporate dollar demand, stock market losses weigh
* Traders said the central bank sold dollars to help rupee
By Swati Bhat
MUMBAI, Sept 5 - The Indian rupee fell to its weakest since Dec. 2006 on Friday as dollar demand from corporates and share market losses weighed on sentiment, although suspected central bank intervention saw it end off its lows.
The partially convertible rupee <INR=IN> ended at 44.645/655 per dollar, 0.66 percent weaker than its previous close of 44.35/36 per dollar, to be down 11.7 percent so far this year.
The rupee fell as low as 44.75, a level it last traded on Dec. 21, 2006, before the central bank was thought to have stepped in as a buyer.
"There was some heavy dollar demand from corporates today, and even oil companies were buying to some extent as oil is coming down, so they are trying to cover positions at these levels," said Rahul Bharatia, manager foreign exchange at IndusInd Bank.
"The central bank is likely to have intervened at the 44.70 levels which is why the rupee recovered a bit. In the near term the rupee could test 45 first, and 45.40 is the target I feel it could touch in this month," he added.
Traders said the central bank had also sold dollars in early trade when the rupee fell towards 44.60, after which dollar flows from a corporate deal helped the unit rise to 44.28.
Traders said inflows related to Japan's Daiichi Sankyo's <4568.T> acquisition of India's Ranbaxy Laboratories <RANB.BO>, started late on Thursday evening and ran into Friday morning.
Oil <CLc1>, India's biggest import, was trading below $107 per barrel, much lower than its July peak above $147. See [O/R].
Indian shares fell 2.8 percent on Friday to their lowest close in more than a week, as renewed worries about the global economy rattled markets worldwide and frightened investors. See [.BO].
The stock losses are a negative for the rupee, as it raises concerns that foreign investors will sell their holdings and repatriate the money. Foreign funds have sold a net $7.1 billion of Indian shares so far this year.
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