Rupee dips 33 paise to 59.67 vs dollar on Fed comments, RBI auction
Mumbai: The rupee extended losses for the second day, dropping 33 paise to 59.67 against dollar, after Fed's comments strengthened the US currency and RBI drained only a fifth of its target in an auction to curb liquidity.
The losses in rupee in past two sessions has brought the rupee close to its levels seen before RBI had unveiled a skew of measures to tame the rupee volatility.
The rupee on Thursday opened weak at 59.61 a dollar from 59.34 previously at the Interbank Foreign Exchange Market and moved in a range of 59.49 and 59.79 before concluding at 59.67, a fall of 33 paise, or 0.56 percent.
The dollar index rose 0.16 percent against its major rivals as US Federal Reserve Chairman Ben Bernanke yesterday reiterated that changes to the central bank's bond-buying program would be data dependant. The USD 85-billion-a-month buying was instrumental in driving up liquidity in emerging market and an early withdrawal is feared to hit flows.
Persistent dollar demand from importers, mainly oil refiners and some banks, in view of the firm dollar overseas, affected the rupee, a forex dealer said.
"The rupee depreciated against the US dollar today due to local as well as global factors. On the local front, the RBI auction results...Came as a negative factor for the rupee," said Abhishek Goenka, founder & CEO, India Forex Advisors.
As per RBI website, the central bank accepted bids for Rs 2,532 crore worth of bonds compared with Rs 12,000 crore on offer. The sale was one of the steps taken by RBI to reduce volatility in the exchange rate.
The Reserve Bank of India, which announced measures on Monday evening to address exchange rate volatility by curbing liquidity, yesterday said it would conduct a special 3-day repo at an interest rate of 10.25 percent for Rs 25,000 crore to allow banks to meet the requirements of mutual funds.
The benchmark Sensex stock index rallied 0.9 percent to close at a six-week high of 20,128.41.