Rupee posts biggest weekly loss in four months

The main reason behind the rupee fall was heavy dollar buying by importers, mainly oil refiners, and some banks on hopes of fall in dollar value overseas.

Mumbai: The rupee plunged by 103 paise to close at one- month low of 53.84 against the Greenback during the week under review on the back of heavy dollar demand from importers amid slowdown in capital inflows.

The sentiment was also dampened after the headline inflation (Wholesale Price Index) rose to its highest level this fiscal at 7.81 percent in September, a development that may restrain RBI from cutting interest rates at its monetary policy review laster this month on October 30.

Consolidating local stock market also weighed on the rupee, a forex dealer said.

At the Interbank Foreign Exchange (Forex) market, the local currency commenced lower at 53.00 and moved in a range of 52.65 and 53.99 before concluding the week at 53.84, showing a fall of 103 paise or 1.95 percent -- its biggest weekly loss in about four month. Last week, it had dipped by 96 paise, or 1.85 percent.

This was the weakest closing for the rupee since it closed at 54.38 on September 20. The rupee after closing at a recent high of 51.74 on October 4, appears to have lost steam and is seen hurtling towards 54-mark as FII inflows have slowed, said forex dealers.

The main reason behind the rupee fall was heavy dollar buying by importers, mainly oil refiners, and some banks on hopes of fall in dollar value overseas.

The Indian benchmark sensex closed the week barely stable, but in positive terrain, up by a mere 7 points.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The INR started the week on a weak note and failed to make a recovery on the second day of the week, reversing its gains on the last two days. The INR turned weak on cramped up demand from importers who had delayed their payments in anticipation of further strengths in dollar".

"The demand from oil importers, corporate and defence related payments continued to push the INR lower recording almost 2 pct fall in just two days. The slowing of foreign capital inflows and the dollar demand from gold importers ahead of the festive season also contributed to the rupee fall," he added.

"The Indian government continued to drive its efforts to come clean on the corruption charges levelled against its top brass along with the minister from opposition and didn't do much towards the policy reforms process.

"The crucial levels for INR appreciation are 52.70 levels and for depreciation the 55.30 levels can be closely watched as rise above 55.30 levels shall weaken the pair till 55.70 levels."

RBI fixed the reference rate for US dollar and euro at Rs 53.7175 and Rs 70.1690 from Rs 52.7000 and Rs 68.1585 last weekend, respectively.

The rupee premium for the forward dollar continued to rule weak on sustained receivings by exporters.

The benchmark six-month forward dollar payable in March ended lower at 135-1/2-137-1/2 paise from last weekend's close of 149-1/2-151-1/2 paise and far-forward contract maturing in September also finished down at 274-276 paise from 293-295 paise.

The rupee plunged further against Pound Sterling to end the week at 86.37 from preceding weekend's level of 84.89 and also tumbled against euro to 70.23 from previous weekend's level of 68.53.

It, too, remained weak against the Japanese yen to 68.03 per 100 yen from last weekend's close of 67.35.