Rupee falls 33 paise amid fresh dollar demand, weak eco data

The rupee declined 33 paise, the most in a week, to 59.89 against the dollar on fresh demand from banks and importers amid disappointing industrial production, a fall in exports and higher inflation.

The rupee resumed lower at 59.93 per dollar, compared with last weekend's level of 59.56 on the Interbank Foreign Exchange market, and once again fell below the 60 level. It hovered between 59.77 and 60.07 before ending at 59.89, a 0.55 per cent loss from the previous close.

The rupee had declined 39 paise against the dollar on July 8, when it dropped to a record low of 61.21.

Fresh dollar demand from banks and importers on the back of a strengthening dollar in the overseas market mainly affected the rupee.

In New York, the US dollar advanced against major rivals on Friday, gaining against the euro on worries about Portugal and France.

The rupee weakened on Monday, taking cues from the surprise drop in industrial output, fall in exports and higher retail inflation, according to data released on Friday, said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). The data added to worries for the economy, which already has a record current account deficit, he said.

Inflation as measured by the wholesale price index snapped a four-month declining trend. Prices rose 4.86 per cent in June compared with 4.7 per cent in May, according to data released on Monday by the Ministry of Commerce and Industry.

The spot rupee depreciated by almost 50 paise during the day as the dollar index, which measures the US currency's value against a basket of six major currencies, traded strong. In the second session, the rupee recovered slightly as local equities closed higher.

Meanwhile, the premium for forward dollars firmed up on paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in December finished higher at 174-1/2-176-1/2 paise from Friday's level of 171-172 paise.

Far-forward contracts maturing in June also firmed up to 363-365 paise from 351-353 paise.

The RBI fixed the reference rate for the US dollar at 60.0510 and for the euro at 78.4705.

The rupee turned negative against the pound sterling to end at 90.13 from the previous close of 89.93 and also dropped against the euro to 77.98 from 77.61.

It rose against the Japanese yen to 59.83 per 100 yen from 59.95.