Rupee falls by 14 paise to 59.66 on dollar demand, weak equities
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Rupee falls by 14 paise to 59.66 on dollar demand, weak equities

Last Updated: Tuesday, July 02, 2013, 18:10
 
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Rupee falls by 14 paise to 59.66 on dollar demand, weak equities
Mumbai: Washing out early gains, rupee on Tuesday depreciated by 14 paise to close at 59.66 on defence-related dollar demand and losses in local stock market.

A firm dollar overseas and concerns over fresh capital outflows weighed on the rupee, a forex dealer said.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced slightly better at 59.50 a dollar from previous close of 59.52. It later rallied further to a high of 59.17 on initial dollar selling by exporters.

However, rupee met with strong resistance and fell back sharply to a low of 59.7150 before settling at 59.66, showing a fall of 14 paise or 0.24 percent.

Yesterday, it had fallen by 13 paise or 0.22 percent, snapping a three-day upmove after closing at historic low of 60.72 on June 26.

"Rupee continued its volatile move today as well. The market expectation of government and finance ministry to announce some positive news on the FDI issue boosted the sentiments in earlier sessions. But later the gains were erased as dollar demand rose in local markets," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

Treasury officials at private banks said the rise in dollar demand today was on account of "defence-related" payments.

Meanwhile, the Indian benchmark S&P BSE Sensex today dipped by 113.57 points or 0.58 percent. FIIs sold shares worth Rs 1.48 crore yesterday, as per provisional data with stock exchanges.

The dollar index was up by 0.21 percent against a basket of six major global rivals.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "Dollar index traded strong against the other major currencies which forced rupee to surrender and closed weak for the second consecutive day.

The major resistance for spot USDINR is set at the 59.88. If it is breached then the next level to watch will be between 60.20- 60.30."

"The sentiment in the stock market weakened due to falling trade volumes and as foreign investors resumed their net sales," Goenka said.

Foreign brokerage Credit Suisse said in a report that the recent rupee fall was mostly due to FII debt outflows -- their USD holdings are now down to January 2012 levels

"The concern for us now is on second order effects on EM Equity flows in case the rise in EM (Emerging Markets) bond yields causes further slowdown. Any disruption in EM equity flows can hurt the Indian Rupee," it added.

Recent developments on the local currency front mean the chance of the RBI cutting at July 30 meeting are close to zero, said experts.

The fear is rupee weakness may reverse some of the positive signs on the macroeconomic front. A weaker local currency can add to inflationary pressure, widen the fiscal deficit and slow capital inflows, without having a positive effect on the current account deficit, they added.

Meanwhile, premium for forward dollar improved further on sustained payments from banks and corporates.

Benchmark six-month forward dollar premium payable in December inched up to 175-177 paise from overnight close of 174-176 paise. Far-forward contracts maturing in June also firmed up to 347-1/2-349-1/2 paise from 341-1/2-343-1/2 paise.

RBI fixed the reference rate for the US dollar at 59.4145 and for the euro at 77.6085.

Rupee recovered against the pound sterling to 90.43 from Monday's close of 90.56 while eased further to 77.68 per euro from 77.63.

It, however, fell back slightly against the Japanese yen to 59.79 per 100 yen from last close of 59.75.

PTI



First Published: Tuesday, July 02, 2013, 18:07


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