Mumbai: The rupee on Monday plunged by 80 paise to close at more than 8-week low of 54.61 on massive dollar demand from banks and importers amid a sharp rise in the American currency in global markets ahead of US Presidential polls.
This is rupee's second biggest loss in 2012. The rupee's biggest daily loss was on June 22 when it fell 85 paise. On October 8, it had lost 79 paise.
The local currency weakened despite FII inflows worth nearly USD 70 million (Rs 374 crore) in stocks.
The local currency opened lower at 54.10 per dollar as against the last weekend's level of 53.81 at the Interbank Foreign Exchange (Forex) Market.
For some time rupee hovered in a narrow range, before dropping to 54.65 after importers and banks rushed to buy dollars. In Tokyo, the dollar hit a two-month high against a basket of major currencies Monday after job reports last week highlighted relatively solid US economic fundamentals.
At closing, the rupee finished a tad better from day's lowest levels closing at 54.61 per dollar, a loss of eighty paise or 1.49 percent from previous closing. The rupee had last ended at 55.43 per dollar on September 13, 2012.
"Weakness in rupee was attributed to the Euro which fell below USD 1.28 and the dollar index which is sustaining above 80.50 levels...Investors are shifting to safe-haven amid uncertainty over US elections and Greece bailout," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The dollar index, a measure of the dollar's value against six major currencies, Monday rose to as high as 80.629, its highest level since September 7.
Meanwhile, the Indian stock market benchmark Sensex rose by merely 7 points Monday.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The risk aversion phenomenon continued to dominate the global markets ahead of the US elections. The safe haven demand continues to flow in dollar..."
The premium for the forward dollar ended lower on fresh receipts by exporters.
The benchmark six-month forward dollar premium payable in April finished down at 162-163-1/2 paise from last Friday's close of 166-168 paise.
Far-forward contracts maturing in October also closed lower at 296-298-1/2 paise from 304-1/2-305-1/2 paise.
The RBI has fixed the reference rate for the US dollar at 54.0778 and for euro at 69.3651.
The rupee reacted downwards against the pound sterling to 87.20 from last Friday's close of 86.58. It also fell back against the euro to 69.84 from 69.31.
The rupee dropped against the Japanese yen to 68.03 per 100 yen from last close of 67.07.
First Published: Monday, November 5, 2012, 22:26