Equity selloff drags Re to 10-mth low

The rupee dropped the most in almost 10 months, as a collapse in global stocks extended to a second week, spurring speculation foreign funds will sell riskier assets including emerging-market shares.

The currency declined to the lowest since December 20 on concern slowing growth in Asia's fourth-biggest economy will prompt fewer stock purchases.

Overseas investors sold more Indian equities than they bought in four of five days last week, according to the latest data provided by the market regulator.

"Should this global meltdown in stocks extend even further, we're looking at the currency weakening more,'' said Paresh Nayar, head of bond and currency trading at Development Credit Bank in Mumbai. "We need to see how long this slide in stocks will continue.''

The rupee fell as much as 0.9 per cent to 44.695 against the dollar before ending the day at 44.6413 in Mumbai, the biggest drop since May 15, according to data compiled by Bloomberg.

The $854 billion economy expanded 8.6 per cent in the three months ended December 31, 2006, a report showed on February 28, slower than 9.2 per cent in the previous quarter.

Global funds sold a net $622 million of Indian stocks last week, the Securities and Exchange Board of India said, the most in a week since January 12. The benchmark Sensex was down 15 per cent from a record reached on February 8.

The index fell 4 per cent this month after falling the most in eight months in February.

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Call rate hits 18-month low

The overnight call rate dropped to the lowest in almost 18 months on the Reserve Bank of India's move to cap draining of overnight liquidity from the banking system to just Rs 3,000 crore.

Call rate closed at 5.5 per cent, which is lower than the reverse repo rate of 6 per cent at which RBI drains liquidity and against 6 per cent at close on Friday.