Falling for the fourth day in succession, the rupee today dipped by 23 paise to close at nearly three-week low of 59.38 against the dollar amidst the RBI announcing an SLR cut that is expected to release nearly Rs 40,000 crore into markets.
The Reserve Bank of India is (RBI) is believed to have intervened through state-run banks as renewed capital inflows in record setting local equities and weak dollar overseas could not to stem the rupee fall.
At the Interbank Foreign Exchange (Forex) market, the local currency commenced slightly lower at 59.17 a dollar from last close of 59.15.
Later, it tumbled to a low of 59.42 before concluding at 59.38, showing a fall of 23 paise or 0.39 per cent from its last close.
Pramit Brahmbhatt, Veracity Group CEO, said the rupee depreciated to trade three week low due to dollar demand from importers, though RBI intervention was seen through state-owned banks.
"Impact of RBI policy was seen on rupee. Though repo rates were maintained at the same level, reduction in SLR caused continuous depreciation in the rupee throughout the day. With the reduction in SLR, banks will have more funds to circulate in the market, said Kiran Kumar Kavikondala, Director & CEO, WealthRays Securities.
As per market expectations, the RBI kept the key policy rates unchanged in the second bi-monthly monetary policy review 2014-15. The central bank, however, reduced the statutory liquidity ration (SLR) by 0.5 per cent. The SLR cut unlocks about Rs 40,000 crore of banking funds.
The dollar index, consisting of six major global units, was down by 0.10 per cent.
Meanwhile, the BSE benchmark Sensex ended the day at all-time closing high of 24,858.59 in a volatile trade. FIIs injected Rs 234.49 crore yesterday, as per provisional data.
Meanwhile, the benchmark six-month premium payable in November settled at 239-241 paise as against 250.5-252.5 paise previously.
Far forward contracts maturing in May, 2015 ended at 475.5-477.5 paise as against previous close of 495-497 paise.
The Reserve Bank of India fixed the reference rate for dollar at 59.2125 and for the euro at 80.5645.
The rupee declined further to 99.43 against the pound from 99.06 previously. It moved down to 80.87 per euro from 80.51. It, however, fell back slightly to 58.01 per 100 Japanese yen from 57.98.