The spree of dollar buying could create a weak patch for the rupee which is not surprising given the news coming from euro zone," said a senior foreign exchange dealer at a state-owned bank. Greece's Prime Minister George Papandreou cancelled a visit to the United States to chair an emergency cabinet meeting at home, and a regional election defeat for German Chancellor Angela Merkel, added to a sense of worsening crisis.
A Reuters poll of more than 50 economists last week gave a 65 percent chance of a Greek default. At 11:23 a.m. (0553 GMT), the partially convertible rupee was at 47.77/78 to a dollar, 1.06 percent weaker than Friday's close of 47.26/27. Traders said it could hit 47.90 during the week. The unit had touched a near two-year low of 48.02 on Sept. 14. The euro was at $1.3662, down from $1.3811 at end of the rupee's trade on Friday, while the index of the dollar against six major currencies was at 77.170 points from 76.550 previously.
Traders said all eyes were on the U.S. Federal Reserve's action plan due Wednesday to support growth in the world's largest economy and the Group of 20 talks starting Thursday on how major economies plan to prevent a spill over of Europe's sovereign debt crisis into the banking sector.
Despite the near-term weakness seen for the rupee, rising domestic interest rates and an expanding economy is expected to limit the unit's retreat, traders said. So far this year, the rupee has weakened by nearly 5.5 percent versus the dollar, the most amongst major Asian units.
The one-month onshore forward premium was at 17.25 points from 19 on Friday, the three-month was at 48.50 points from 53.75 and the one-year was at 114.25 points from 129. One-month offshore non-deliverable forward contracts were quoted at 48.01, weaker than the onshore spot rate. In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 47.8250. The total volume was $2.41 billion
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