Mumbai: The rupee continued its downslide for the third straight day Wednesday by losing a hefty 25 paise to close at nearly 6-week low of 55.91 on heavy dollar demand from importers, amid a weak trend in local stock market.
A strong dollar overseas ahead of the ECB's meeting on interest rates slated for Thursday also weighed on the rupee, forex dealers said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed lower at 55.75 a dollar from previous close of 55.66 and immediately touched a high of 55.74. It fell further to a low of 55.99 in the morning session itself.
The rupee remained range-bound throughout the day, before settling at 55.91, a fall of 25 paise or 0.45 percent over Tuesday. This was the lowest close for the domestic currency since 56.16 on July 25, 2012.
Dealers attributed the drop in rupee value to sustained dollar demand from importers, mainly oil refiners and weakness in domestic equities. The dollar index, a gauge of six major global currencies, was last up by 0.13 percent.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The rupee was sharply lower tracking rebound in dollar index after the cable currencies shed gains on fading hopes of bond buying announcements by ECB in its meet tomorrow."
"The deteriorating economic numbers from EU from the spending and sales then pinned up hopes of some action from ECB and BoE which supported global markets but the bias remained weak," he added.
The Indian stock market benchmark Sensex moved in negative terrain throughout the day and closed down by 127.53 points.
"The rupee closed weaker today, weighed down by excessive dollar demand by corporate, weak Euro and strengthening dollar index. The rupee is nearing the psychological significant level of 56 per US dollar," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The premium for the forward dollar declined further on sustained receipts by exporters. The benchmark six-month forward dollar premium payable in February ended weak at 176- 178 paise from 180-182 paise yesterday.
The premium for far-forward contracts maturing in August also moved down to 328-330 paise from 333-335 paise.
The RBI has fixed the reference rate for the US dollar at 55.8950 and for euro at 70.0250.
The rupee continued to rule weak against the pound sterling to end at 88.87 from Tuesday's close of 88.36 and also fell further against the euro to 70.20 from 70.06.
It too dipped against the Japanese yen to 71.34 per 100 yen from last close of 71.00.
First Published: Wednesday, September 5, 2012, 19:11