The rupee on Wednesday fell 24 paise to an all-time closing low of 61.43 against the dollar after July inflation unexpectedly rose to a five-month high, prompting the RBI to announce more measures to support the currency.
Mumbai: The rupee on Wednesday fell 24 paise to an all-time closing low of 61.43 against the dollar after July inflation unexpectedly rose to a five-month high, prompting the RBI to announce more measures to support the currency.
The decline came amid fresh dollar demand from importers and better-than-expected GDP growth in Germany and France.
The rupee opened lower at 61.54 a dollar from the previous close of 61.19 at the Interbank Foreign Exchange Market and touched a low of 61.56 on initial weakness in local stocks and dollar selling by exporters.
It recovered to a high of 61.29 on a smart rebound in local equities, only to fall again to a new closing low of 61.43, a drop of 24 paise or 0.39 percent. The previous closing low was 61.30 on August 7.
Government data showed inflation based on the Wholesale Price Index shot up to a five-month high of 5.79 percent from 4.86 percent in June.
"The emerging scenario on inflation further complicates monetary policy making," said Kotak Mahindra Bank Chief Economist Indranil Pan.
The rupee was seen getting depreciated due to poor data and a strong recovery in the US dollar index, said Abhishek Goenka, founder & CEO of India Forex Advisors.
"Today's inflation number failed to paint an optimistic picture. It is seen weakening despite the measures announced by the Finance minister on Monday," he added.
Food article prices rose for the third straight month, while the declining value of rupee made oil imports costlier and pushed up fuel and power inflation to 11.31 percent.
The dollar index, which strengthened in early deals overseas, was almost stable as the euro rebounded following Germany's GDP data.
The benchmark S&P BSE Sensex rallied further by 137.75 points or 0.72 percent, while FIIs pumped in Rs 227.08 crore yesterday, as per provisional data with the stock exchanges.
"The dollar index traded strong today, which depreciated the rupee," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
After the market closed, the Reserve Bank of India announced fresh curbs on outflows under the automatic approval route.
It reduced the limit for overseas direct investment by domestic companies from 400 percent of net worth to 100 percent. The limitation doesn't apply to investments made by Oil India and ONGC Videsh in overseas oil sector entities.
The central bank cut the limit for remittances made by resident individuals to USD 75,000 a financial year from USD 200,000. The use of such remittances for acquisition of immovable property outside India will not be allowed.
Forward dollar premiums closed mixed. The benchmark six-month forward dollar premium payable in January softened to 256-1/2-259 paise from the overnight close of 257-260 paise while far-forward contracts maturing in July rose to 491-1/2- 494-1/2 paise from 486-489 paise.
The RBI fixed the reference rate for the dollar at 61.5160 and for the euro at 81.6266.
The rupee fell back sharply against the pound sterling to 95.19 from Tuesday's close of 94.58 and declined to 81.38 per euro from 81.32.
It moved down against the Japanese yen to 62.52 per 100 yen from 62.43.