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Rediff.com  » Business » Rupee plunges to hit two-and-a-half-month low

Rupee plunges to hit two-and-a-half-month low

Last updated on: November 23, 2012 20:09 IST

MoneyContinuing its decline for the fourth straight session, the rupee on Friday tumbled by 30 paise to touch a fresh two-and-a-half-month low of 55.51 against the US dollar on sustained demand for the American currency from importers and some banks.

Forex dealers said the rupee sentiment was hit by investor concerns over economic reforms as Parliament was adjourned for the second day today.

Even sustained capital inflows and weak dollar overseas could not able to stem the rupee fall, they added.

The domestic unit opened a tad higher at 55.20 at the Interbank Foreign Exchange (Forex) market against the dollar from last close of 55.21 and immediately touched a high of 55.18 on early rise in local equities.

However, it failed to maintain the upward momentum and fell back sharply to a low of 55.61 on continued month-end dollar demand from importers, mainly oil refiners, and some banks. It finally closed at 55.51, a net loss of 30 paise, or 0.54 per cent, from its last close.

The rupee has plunged by 45 paise, or 0.82 per cent, in the last four sessions. The last time rupee plunged to this level was on September 6 when it had settled at 55.66.

"Volatility in the euro which fell below 1.29 today from 1.36 in the beginning of the week against the dollar and widening of the domestic trade deficit mainly weighed down on the rupee. Import bills of oil going up also hit the local unit," Dhanlaxmi Bank Executive Vice-President (Treasury) Srinivasa Raghavan said.

The dollar index was down by 0.12 per cent against a basket of six major rivals, while New York crude oil was quoting above $87 a barrel in Europe today.

"The rupee continued to weaken on political ruckus created in Parliament defying the positive sentiments of global markets due rising risk on," Alpari Financial Services (India) CEO Pramit Brahmbhatt said.

Meanwhile, the BSE benchmark Sensex today declined by 10.77 points to 18,506.57. FIIs injected $33.13 million yesterday as per Sebi data.

"The rupee ended to its two and a half month low as there were hopes of sustained dollar demand from oil refiners. The weakness in rupee was not supported by the dollar which was trading below 81 and the euro surpassed the level of 1.2900.

Still, rupee did not see any signs of appreciation," Abhishek Goenka, Founder and CEO, India Forex Advisors said.

"The rupee was seen falling heavily despite continued weakness in the US dollar and recovery in the Euro. This indicates that there was a genuine demand for the dollar in the market. Going forward, if some positive reforms come out of the ongoing winter session of the parliament, then we might see rupee appreciating in the near term," he added.

The premium for the forward dollar ended steady to easy on stray receipts by exporters. The benchmark six-month forward dollar premium payable in April settled at its overnight closing level of 141-142 paise.

However, far-forward contracts maturing in October ended down at 280-1/2-282-1/2 paise from 283-285 paise. The RBI has fixed the reference rate for the US dollar at 55.3445 and for euro at 71.3665.

The rupee continued its south-bound journey against the pound sterling to end at 88.48 from Thursday's close of 88.07 and also dropped further against the euro to 71.61 from 71.08.

It, however, reacted downwards sharply against the Japanese yen to 67.49 per 100 yen from last close of 66.80.

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