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Rupee drops 24 paise to 55.58 on dollar demand

Last Updated: Monday, July 30, 2012 - 20:35

Mumbai: Snapping two straight days of gains, the rupee Monday weakened by 24 paise to close at 55.58 on heavy month-end dollar demand from oil importers even as stock markets surged 300 points.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced slightly higher at 55.28 a dollar from last Friday's close of 55.34 and immediately touched a high of 55.20 on strong local stocks for the straight second session.

However, the sentiment turned weak soon after on dollar buying by importers, mainly oil refiners, to meet their month-end requirements and also recovery in dollar overseas. Brent crude oil fell under USD 106 a barrel on Monday.

The rupee fell to a low of 55.62 before concluding at 55.58, a fall of 0.43 percent or 24 paise. In the previous two sessions, rupee had gained 82 paise or 1.46 percent.

According to provisional data, FIIs -- who have pumped in over Rs 8,400 crore in this month till July 27 -- invested over Rs 900 crore on Monday, capping the fall in rupee.

The dollar index, a gauge of six major global currencies, was up by nearly 0.24 percent following fall in euro on doubts over the success of the European Central Bank's (ECB) policy actions to protect the Eurozone.

"The rupee turned weak after initial gains in spite of solid gains in Indian bourses mainly tracking weak global currencies. The Italian bond yields didn't put the expected respite raising questions on recent comments of ECB to tackle the debt contagion," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said.

The Indian stock market benchmark Sensex, after gaining by over 199 points last weekend, today spurted by over 304 points or 1.81 percent.

Forex experts feel that in the short-term some global and local events may put further pressure on the rupee.

"With RBI, FED and ECB, there exists significant event risk for rupee. If trifecta stays pat on their existing monetary policies, then USD/INR can return to 56 and above. However, if the risk-on mood persists post the trio-events, then we could see even a move towards 54.18/54.00 on spot," said Anindya Banerjee, currency expert, Kotak Securities.

The Eurozone official meeting on Thursday will be keenly eyed by the global investors, dealers said.

"...The Euro is expected to witness selling pressure at 1.23 levels, importers take the advantage of dips to cover their open exposure. Overall, we are still bearish on the rupee,"said Abhishek Goenka, CEO, India Forex Advisors.

The premium for the forward dollar finished on Monday narrowly mixed. The benchmark six-month forward dollar premium payable in December ended at 152-154 paise from last weekend's close of 152-1/2-154-1/2 paise.

The premium for far-forward contracts maturing in June settled at 297-1/2-299-1/2 paise from 297-299 paise.

The RBI fixed the reference rate for the US dollar at 55.4428 and for euro at 68.1465.

The rupee moved down further against the pound sterling to end 87.27 from last Friday's close of 86.90 while fell back against the Euro to 68.15 from 68.01.

It also turned negative against the Japanese yen to end at 71.08 per 100 yen from last close of 70.80.


First Published: Monday, July 30, 2012 - 09:58
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