Re crashes to nearly 5-mnth low at 55.11 against dollar
The rupee Monday fell to its nearly five-month low level of 55.11 by losing 23 paise on sustained dollar demand from oil importers and concerns over possible rating downgrade by S&P.
Mumbai: The rupee Monday fell to its nearly five-month low level of 55.11 by losing 23 paise on sustained dollar demand from oil importers and concerns over possible rating downgrade by S&P.
Forex dealers said weakness in local equities and a firm dollar overseas against other currencies also weighed on the rupee.
The local unit commenced the day lower at 55.06 against the dollar from its Friday's close of 54.88 at the Interbank Foreign Exchange (Forex), market.
However, it later recovered to a high of 54.80 on dollar selling by exporters and initial firmness in domestic equities but again fell to a low of 55.20, before settling at 55.11, a fall of 23 paise, or 0.41 percent. It is rupee's lowest level since January 7 this year, when it had closed at 55.23.
"The fall in rupee was expected after S&P's warning to downgrade the Indian economy to junk status on Friday. Also a bearish stock market and weakening in euro and Japanese yen against the dollar also dampened the rupee sentiment Monday," said N S Venkatesh, Head (Treasury) at IDBI Bank.
He added that rupee will move in a range of 54.80-55.20 this week.
On Friday, global agency Standard & Poor's threatened to downgrade India's rating to 'junk' status if it fails to pursue reforms.
The BSE Sensex Monday closed down by over 62 points at 20,223.98.
Foreign institutional investors pumped in around USD 137 million (Rs 753.37 crore) into domestic equities Monday, according to BSE provisional data.
The dollar index was down by 0.25 percent against a basket of six major global currencies.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, traded weak Monday as the euro lost against the dollar which hit the rupee."
"As expected the rupee hit the key level of 55.00 against the US dollar, and further weakness is expected. Technically, any sustained break above 55.20 will be very crucial. Pessimistic comments by the rating agency S and P have all contributed for the losses in the rupee," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Meanwhile, the premium for the forward dollar declined further on sustained receipts by exporters.
The benchmark six-month forward dollar premium payable in October moved down to 155-157 paise from last Friday's close of 157-1/2-159-1/2 paise and far-forward contracts maturing in April also ended lower at 315-1/2-317-1/2 paise from 319-1/2-321-1/2 paise.
The RBI fixed the reference rate for the US dollar at 55.0368 and for the euro at 70.6835.
The rupee eased further against pound sterling to 83.76 from last close of 83.68 and also dropped against the euro to 70.89 from 70.65.
Rupee too remained weak against the Japanese yen to 53.73 per 100 yen from previous close of 53.56.