Rupee plummets 57 paise, biggest drop in 2 months

Today's fall was the biggest in last two months after it had plunged by 80 paise or 1.49 percent on November 5, 2012.

Mumbai: The rupee on Friday recorded its biggest slump in two months by plunging 57 paise to end at 55.07 on massive demand of the US currency from oil firms, amid dollar gaining strength on speculation that some US Fed officials are not in favour of continuing the bond-buying plan.

At the Interbank Foreign Exchange (Forex) market, the local currency commenced lower at 54.82 a dollar from previous close of 54.50 and immediately touched a high of 54.76.

However, it started falling soon and logged an intra-day low of 55.17 before closing slightly better at one-month closing low of 55.07 -- a fall of 0.57 paise or 1.05 percent.

Today's fall was the biggest in last two months after it had plunged by 80 paise or 1.49 percent on November 5, 2012.

Continued dollar demand from importers and some banks on hopes of further rise in dollar value overseas put the rupee under pressure, said forex traders.

The rupee was unable to stage a turnaround even as FIIs pumped nearly Rs 1,200 crore in Indian stocks, they added.

The dollar index rose by 0.36 percent ahead of December nonfarm payrolls data due later in the day, and after reports said minutes of the Federal Reserve's last meeting showed its members were considering an end to asset purchases this year.

"The thought of end to asset purchase came as a big surprise to the markets, which helped the dollar rebound drastically," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

The Fed's bond buying plan pumps dollars in the market and hopes of an earlier-than-expected end to the plan would ease the supply of the US currency, experts said.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said,"The rupee extended its weakening spree for the second straight session on sharp rise in dollar index and weaker tone of global equity markets."

Meanwhile, the BSE benchmark Sensex today erased initial losses to end 19 points higher on fag-end buying in oil & gas stocks triggered by hopes fuel price hikes.

"Major global currencies were sharply lower after the FOMC members raised concerns over the timing of its monthly easing program," said Brahmbhatt.

The premium for the forward dollar ended steady to better on stray payments by banks and corporates.

The benchmark six-month forward dollar premium payable in June settled stable at its overnight level of 167-1/2-169 paise. Far-forward contracts maturing in December closed slightly up at 309-1/2-311 paise from 308-1/2-310 paise.

The RBI has fixed the reference rate for the US dollar at 54.84 and for euro at 71.54.

The rupee fell back slightly against the pound sterling to 88.21 from previous close of 88.18 and also turned negative to end at 71.59 per euro from 71.42.

It, however, recovered against the Japanese yen to 62.40 per 100 yen from last close of 62.68.