Rupee at 4-wk low, closes five paise down at 56.16
Extending its downward trend for the fourth straight day, the rupee Wednesday lost five paise to close at a four-week low of 56.16 against US dollar even though a late rally in Euro helped it recover from day's lows.
Mumbai: Extending its downward trend for the fourth straight day, the rupee Wednesday lost five paise to close at a four-week low of 56.16 against US dollar even though a late rally in Euro helped it recover from day's lows.
Sustained dollar demand from importers and fresh capital outflows weighed on the rupee, forex dealers said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit opened sharply weak at 56.30 a dollar against overnight close of 56.11.
With dollar demand gaining ground, the rupee moved downwards in the afternoon to a low of 56.44. There was no support from Foreign Institutional Investors (FIIs) who sold stocks worth Rs 372 crore on Wednesday as per provisional data.
However, with Euro bouncing back from its two-year lows against the dollar on reports that an ECB member in is favour of giving a banking licence to the Eurozone rescue fund, the sentiments in favour of rupee improved.
On the back of this strength, the rupee strengthened to 56.11, before concluding five paise weaker at 56.16. In the last four days, rupee has lost 104 paise against the dollar.
"Rupee cut day's losses to recover most of the lost ground on a rebound in Euro over reports that a proposed banking licence is to be issued to European Stability Mechanism which will allow it to access funds from ECB," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
Analysts said local events did not seem to have much impact on the rupee today.
"We expect the market to be volatile ahead of the policy meet of RBI and FED, scheduled for the month end. We still maintain the target of 56.50 levels in the days to come," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Meanwhile, the Indian stock market benchmark Sensex also closed down by over 72 points or 0.43 percent.
The premium for the forward dollar closed barely stable on alternate bouts of buying and selling.
The benchmark six-month forward dollar premium payable in December closed a tad lower at 157-1/2-159-1/2 paise from yesterday's close of 158-160 paise.
The premium for far-forward contracts maturing in June, however, ended at its overnight level of 304-306 paise.
The RBI fixed the reference rate for the US dollar at 56.3755 and for euro at 68.0455.
The rupee recovered slightly against the pound sterling to end at 87.08 from Tuesday's close of 87.11 while it remained feeble against the Euro to 68.23 from 67.90.
It also eased further against the Japanese yen to 71.79 per 100 yen from last close of 71.75.