Hit by heavy dollar demand, rupee Thursday tanked by 40 paise to end at 54.47, its weakest level in over a month, as the American currency spurted on speculation that US Fed may withdraw its monetary stimulus sooner-than- expected triggering a global sell-off across asset classes.
Mumbai: Hit by heavy dollar demand, rupee Thursday tanked by 40 paise to end at 54.47, its weakest level in over a month, as the American currency spurted on speculation that US Fed may withdraw its monetary stimulus sooner-than- expected triggering a global sell-off across asset classes.
The rupee resumed lower at 54.37 per dollar as against the last closing level of 54.07 at the Interbank Foreign Exchange (Forex) Market. Tracking weak global stock markets and rising dollar demand, the rupee further fell to 54.60.
Despite FIIs pumping over USD 220 million in Indian stocks as per provisional exchange data, the rupee failed to make a turnaround and closed at over one-month low of 54.47, recording a loss of 40 paise or 0.74 percent.
The rupee had closed at 54.69 a dollar on January 16.
In terms of fall, Thursday's rupee losses are the biggest since the 57-paise drop on January 4 to end above 55-mark.
Dollar demand from banks and importers during the day on the back of higher dollar in the overseas market affected the rupee value, a forex dealer said.
The dollar gained after minutes of US Federal Reserve's last meeting that were disclosed yesterday showed many Fed officials are worried about the costs and risks associated with the USD 85 billion?per?month asset-purchase program.
"The FOMC minutes gave signals that the Fed might end the QE3, which will be positive for the dollar index," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
In Sydney, the US dollar held firm today, having enjoyed its biggest one-day gain in seven months against a currency basket as commodities and global equities slid.
The Euro was seen falling below USD 1.33 after the FOMC minute reports but poor data from Euro-zone is adding more pressure on the Euro and consequently on the rupee, he added.
Meanwhile, the Indian benchmark Sensex dropped sharply by 317 points or 1.62 percent to close at 19,325.36.
Pramit Brahmbhatt, CEO of Alpari Financial Services (India) said major European bourses are seen trading under considerable stress so far after FOMC minutes showed that some members expressed concerns about the central bank's monetary- easing program, coupled with some caution seen ahead of the release of some key economic reports from the US later today.
The premium for the forward dollar ended lower on fresh receipts by exporters.
The benchmark six-month forward dollar premium payable in July moved down to 171-1/2-172-1/2 paise from 175-177 paise yesterday.
Far-forward contracts maturing in January also declined to 337-339 paise from 341-343 paise..
The RBI fixed the reference rate for the US dollar at 54.4800 and for euro at 72.2318.
The rupee dropped against the pound sterling to 83.12 from last close of 82.79 while the euro firmed up to 71.81 from 72.42 on Wednesday.
However, the rupee declined against the Japanese yen to close a 58.63 per 100 yen as against 57.80 previously.