Mumbai: The Indian rupee reacted sharply downwards by 86 paise to finish at one-month low of 54.80 against the American currency on fresh dollar demand from banks and importers on the back of higher dollar in the overseas market in spite of bullish local equities and heavy foreign funds inflows.
The rupee resumed higher at 53.78 per dollar as against the last weekend's level of 53.94 per dollar at the Interbank Foreign Exchange (Forex) Market on selling of dollars by banks and exporters.
However, it continued to decline after Tuesday and logged a low of 54.8050 per dollar before ending the week at one-month low of 54.80 per dollar, showing a loss of 86 paise or 1.59 percent on heavy dollar demand from banks and importers. Last week, it had risen by 43 paise or 0.79 percent.
This is rupee's lowest level since April 5 this year, when it had hit a low of 54.81.
The rupee tanked following strengthening of dollar in global markets tracking favourable US job data and oil related forex payments by Indian refiners.
Additionally, the greenback also strengthened against yen.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies traded positively after US new claims for unemployment benefits dropped to the lowest level in more than five years.
Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt. Ltd said," this week Rupee traded low as Dollar demand from oil importers, defence- related purchases & dollar buying from custodian banks weakened the Rupee. Indian shares traded positively for the week taking cues from dollar inflows & also the IIP data for March was came 2.5 percent better than the market expectations."
The premium for the forward dollar declined on fresh receiving by exporters.
The benchmark six-month forward dollar premium payable in October closed the week sharply lower at 164-166 paise as against the last weekend's level of 177-179 paise.
Far-forward contracts maturing in April also dipped at 325-327 paise as compared to 342-344 last weekend.
The Reserve Bank of India fixed the reference rate for the US dollar at 54.5413 and for euro at 71.1075 as against the last weekend's level of 53.9510 and for euro at 70.4994.
The rupee also dropped against the pound sterling and euro and continued to rule firm against the Japanese yen.
The rupee fell against the pound sterling to 84.32 from preceding weekend's level of 83.89 and also declined against euro to 71.14 from 70.79 previously.
However, the rupee firmed up further to 53.89 per 100 yen from the last weekend's level of 55.00.
First Published: Saturday, May 11, 2013, 17:25