Re falls back by 16 ps at 54.17 on firm dollar
Mumbai: Bearish domestic equities amid steep rise in dollar value overseas on re-emergence of eurozone debt crisis weighed on the rupee as it fell back by 16 paise to end at 54.17 against the USD.
Fress dollar demand from importers and some banks on the back of smart rise in American unit overseas following fall in euro after Mediterranean country Cyprus last weekend got Euro 10 billion rescue package from lenders but planned to tax bank deposits as a part of sovereign bailout.
The dollar index was remarkably up by 0.55 pct against a basket of six major global currencies as investors preffered to exit from euro and went for safe heaven dollar.
At the Interbank Foreign Exchange (Forex) market, the local unit resumed weak at 54.28 a dollar and immediately touched a low of 54.35.
However, late dollar selling by exporters helped the rupee recover some ground and logged a high of 54.11 before settling at 54.17, still showing a fall of 16 paise or 0.30 pct. Last Friday, it had risen by 34 paise or 0.63 pct.
The Indian benchmark sensex Monday plunged by 134.36 points or 0.69 pct while FIIs injected Rs 1,018.93 crore last Friday, as per provisional data with stock exchanges.
Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "Rupee ended weak as equity markets closed down, taking cues from Euro which dropped against the dollar after the news was out that Cyprus plans to impose a one-time levy on bank deposits as part of a sovereign bailout deal.
Investors are widely looking ahead at the apex bank's policy review tomorrow amid hopes that the bank will cut interest rates by 25 basis points in a bid to support economic growth which will help USDINR pair to decide its direction."
"The rupee depreciated Monday tracking the global factors. The strong recovery in the dollar index and weakness in the Euro made rupee to lose against the US dollar. Uncertainties hovering over the Cyprus bailout deal forced Euro to fall below USD 1.2900 levels, thereby putting pressure on the rupee.
It was a quite range bound session for rupee ahead of the RBI monetary policy tomorrow," said Mr. Abhishek Goenka, Founder and CEO, India Forex Advisors.
Meanwhile, the premium for the forward dollar softened on stray receipts by exporters.
The benchmark six-month forward dollar premium payable in August eased to 174-1/2-176 paise from last weekend's close of 175-1/2-177-1/2 paise.
Far-forward contracts maturing in February also slipped to 335-337 paise from 336-338 paise.
The RBI fixed the reference rate for the US dollar at 54.2915 and for euro at 70.0187.
The rupee remained weak against the pound sterling to 81.92 from previous close of 81.81 while fell back against the Japanese yen to 57.05 per 100 yen from 56.22.
It, however, recovered against the euro to 70.16 from last close of 70.51.