Rupee depreciates another 8 paise to 62.09 against dollar
Mumbai: The rupee surrendered initial gains and fell for the second day, losing eight paise to 62.09 against the dollar Wednesday as concerns about the US Federal Reserve tapering its stimulus programme outweighed the RBI's surprise status quo decision on interest rates.
Demand from importers for the dollar, which strengthened overseas, also put pressure on the rupee, while sustained capital inflows restricted the fall.
The rupee opened strong at 61.90 a dollar from the previous close of 62.01 at the interbank foreign exchange market. It climbed to 61.77 on a smart rebound in domestic stocks after the central bank unexpectedly kept all key policy rates unchanged in its Mid-Quarter Monetary Policy Review.
The RBI left the key repo rate at 7.75 percent and the cash reserve ratio at 4 percent. Analysts had expected a 25 bps increase in the repo rate after both retail and wholesale inflation remained high in November.
However, the rupee fell on dollar demand from importers to a low of 62.18 before ending at 62.09, a loss of eight paise or 0.13 percent.
"Rupee was immediately seen appreciating (after RBI policy) but it was a short-lived impact. Later in the session, rupee was seen weakening ahead of the next important event of the day - the Fed's decision on quantitative easing, which will decide the further direction of the market," said Abhishek Goenka, CEO of India Forex Advisors.
The 30-share benchmark Sensex rose 247.72 points, or 1.2 percent, after six straight days of losses. Foreign institutional investors bought shares worth a net Rs 249.93 crore yesterday, according to provisional data.
The dollar index was up 0.07 percent ahead of the outcome of the US Federal Reserve meeting later today on the future of stimulus measures.
Forward dollar premiums declined on fresh receipts by exporters. The benchmark six-month forward dollar premium payable in May moved down to 243-245 paise from 245-247 paise previously and far-forward contracts maturing in November also closed lower at 486-1/2 to 488-1/2 paise from 490 to 492-1/2 paise.
The RBI fixed the reference rate for the dollar at 61.9176 and for the euro at 85.2692.
The rupee dropped to 101.52 against the pound from the overnight close of 101.06 and remained weak at 85.40 against the euro from 85.34. It softened to 60.32 per 100 Japanese yen from 60.26.