Rupee closes at 2-month low of 54.75 Vs US dollar

The Indian rupee tumbled by another 94 paise to settle the week at two-month low of 54.75 against the Greenback following late weakness in the local equities amid sustained dollar demand from importers and some banks.

Updated: Nov 10, 2012, 17:52 PM IST

Mumbai: The Indian rupee tumbled by another 94 paise to settle the week at two-month low of 54.75 against the Greenback following late weakness in the local equities amid sustained dollar demand from importers and some banks.

Mid-week recovery in the dollar overseas also weighed on the rupee while continued capital inflows could not able to stem the fall in the rupee, a forex dealer said.

At the Interbank Foreign Exchange (Forex) market, the rupee commenced remarkably lower at 54.10 and on the same day it logged second biggest loss in current calender year in absolute term of 80 paise on Monday to settle at 54.61. The rupee's biggest daily loss was on June 22 when it fell 85 paise. On October 8, it had lost 79 paise.

Later, it recover for the next two days on firm domestic equities amid dollar selling by exporters and some banks on hopes of further fall in dollar value.

The rupee moved in a wide range of 53.90 and 54.7850 during the week before concluding at two-month low of 54.75, showing a fall of 94 paise or 1.75 percent over its last week's loss of 25 paise or 0.47 percent.

Previously, the rupee had last ended at 55.43 per dollar on September 13, 2012.

The Indian rupee, which traded firm on first three day's of the week, surrendered all of its gains on the last two days and closed lower by 71.77 points or 0.38 percent.

Analysts see the rupee making a sustained bounce back soon and a report by Bank of America Merrill Lynch said it is expected to touch 51-level against US dollar by December.

The rupee appreciated by a robust 23 paise on Wednesday, its biggest gain in two weeks amid hopes that US President Barack Obama will allow US Fed to maintain its quantitative easing programme.

Traders tying the weakness to a increase in risk appetite and lower attraction to safe-haven assets like dollar after Obama re-elected as a President for the second term.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The INR witnessed a weak start for the week and dropped further on the very first day itself but pared almost all the weakness towards the penultimate day.

"The pair then weakened sharply on the last day of the week ending on a weak note. The last week was full of major international triggers in global markets right from US election to Chinese selection and power transition to next generation leaders and the Greece parliamentary vote ratifying the government's austerity move."

"The tacked up demand from Oil and Gold importers due to the upcoming festive season along with corporate demand continue to weigh on INR which eased to near September 13's closing low.

"The global factors continue to guide the liquidity expectations in global markets and the same led to higher volatility in domestic bourses too. The re-election of President Barack Obama as the 44th President of USA continued to cheered the market but erased the gains in same session witnessing its sharpest declines of the year on rising "Fiscal Cliff" concerns from US," he added.

"The US is set to undergo sharp rise in taxes and massive spending cut from this January 1, 2013 which shall reduce the demand in the largest economy of the world.

"For the week Importers can create a partial long hedge around the 54.00 - 54.25 levels for their payments and Exporters can use the weakness towards 55.25 - 55.00 levels to initiate short hedge with a stop loss above 55.50 levels as to cover their receipts.

"The crucial levels for INR appreciation are 53.90 levels and for depreciation the 55.10 levels can be closely watched as rise above 55.10 levels shall weaken the pair till 55.50 levels," he further commented.

RBI fixed the reference rate for US dollar and euro at Rs 54.3400 and Rs 69.4274 from Rs 53.6645 and Rs 69.2425 last weekend, respectively.

The rupee premium for the forward dollar finished sharply lower on fresh receiving by exporters.

The benchmark six-month forward dollar payable in April settled down at 153-155 paise from last weekend's close of 166-168 paise and far-forward contract maturing in October also ended lower at 292-294 paise from 304-1/2-305-1/2 paise.

The rupee declined further against Pound Sterling to end the week at 87.33 from preceding weekend's level of 86.58 and also remained sharply weak against the Japanese yen to 69.09 per 100 yen from 67.07.

However, it reacted downwards against the euro to close at 69.61 from previous weekend's level of 69.31.

Dealers said forex trading was tepid ahead of Diwali holidays with currency markets slated to remain closed on November 13-14.