Indian rupee at 1-½ mo low as dlr firms abroad

MUMBAI (Reuters) - The rupee weakened to a one and half month low on Monday as a stronger dollar overseas weighed on sentiment, but likely central bank intervention is seen halting the Indian unit from falling too steeply.

At 10:05 a.m., the partially convertible rupee was at 43.28/29 per dollar, off a low of 43.34, its weakest since July 8, and 0.6 percent weaker than 43.01/02 at close on Thursday.

Financial markets were closed on Friday for Independence Day.

"The rupee is tracking the weakness in other Asian currencies and even in the offshore the dollar was quite high on Friday, so that also led to some dollar buying in the morning," a dealer with a private bank said.

"The rupee may fall towards 43.50 if it breaks 43.30 in a major way, but state-run banks are likely to sell dollars to hold it above that level," he added.

One-month offshore non-deliverable forward contracts were quoting at 43.60/70, 0.7 percent weaker than the onshore rate.

The dollar hit a six-month high against the euro on Monday, then slipped as oil prices rebounded, but worries about the euro zone economy stalling kept its losses limited.

Dealers said they were also watching the local stock market, which opened down 0.3 percent to gauge fund flows. Foreign fund outflows in recent months have weakened a key support for the rupee.

Foreigners have so far sold a net $6.7 billion worth of Indian shares after buying a record $17.4 billion last year.

Data on Thursday showed the central bank sold $7 billion in intervention in June, the biggest single-month figure since they started publishing data in April 1995.