Rupee wipes out last week's gains; closes at 55.07 Vs dollar
Mumbai: Rupee washed out all of its last week's gains, depreciating by 30 paise to settle at 55.07 against USD following dollar demand from importers and some banks after mid-week amid firm dollar overseas on speculation that some US Fed officials are not in favour of continuing the bond-buying plan.
However, strong domestic equities and sustained capital inflows, restricted the fall, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the local currency commenced the week a tad higher at 54.76 a dollar from last weekend's close of 54.77 and improved further to a three-week high of 54.27 on Wednesday on dollar selling by exporters and firm dollar overseas.
However, it turned negative after mid-week on renewed dollar demand from oil importers and some banks on hopes of further rise in dollar value after US lawmakers clinched a last-minute deal to avert the so called "fiscal cliff" for the time being.
It later logged a low of 55.17 before concluding the week at 55.07, showing a fall of 30 paise or 0.55 percent. Last week, it had risen by 29 paise or 0.53 percent.
Sensex spurted further by 339.24 points or 1.74 percent while Foreign Institutional Investors (FIIs) injected USD 828.67 million in the first 4 days of the week.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said,"The INR after a stronger open, fell back towards the midweek, breaching the previous 4 week lows in the last 2 days of the week. Major weakness of over 1 pct has been witnessed on the last day of the week."
"The first week of the new year witnessed sharp swings on both the side. The week posted some major half year economic numbers of national accounts and the twin deficits which widened further forcing the government to take stern action to contain it around targeted levels. The government has proposed to increase the fuel and cooking gas prices to cut down on fiscal deficit and raise import taxes for Gold thereby cutting down on the trade deficit where the precious metal constitutes to be a major composition along with oil products," he added.
"High fiscal as well as current account deficit pointed towards burgeoning demand for dollars in near future which can even push the INR below its historical lows if not controlled. The equity and high yielding currencies rebounded from their lows while most of them ended the session on positive note thereby erasing some loses in INR on DGCX. The importers demand at lower levels arrested gains in INR but the hopes of rate cut action from RBI and exporter selling at higher levels continued the weakness in INR. A dip towards 54.50 levels shall be ideal to start covering the dollar payments," he further commented.
The RBI fixed the reference rate for US dollar and euro at Rs 54.8458 and Rs 71.5405 from Rs 54.8473 and Rs 72.6298, respectively, in the last weekend.
The rupee premium for the benchmark 6-month forward dollar payable in June closed the week at 167-1/2-169 paise.
Far-forward contracts maturing in December ended at 309-1/2-311 paise.
The rupee improved further against Pound Sterling to end the week at 88.21 from preceding weekend's level of 88.31 and remained firm against the euro to finish at 71.59 from last weekend's level of 72.16.
It, also shot up against the Japanese yen to close at 62.40 per 100 yen from 63.51 last weekend.