Rupee snaps 2-day upmove, down 22 paise

Rupee snaps 2-day upmove, down 22 paise Mumbai: The rupee snapped its two-day upward trend by depreciating a hefty 22 paise to close at 55.43 Thursday on fresh dollar demand from banks and importers ahead of the US Fed meeting on monetary policy.

The rupee resumed lower at 55.29 per dollar compared to its last closing level of 55.21 at the Interbank Foreign Exchange (Forex) Market.

With dollar demand rising, it dropped further to 55.49, before ending slightly better at 55.43 -- a loss of 22 paise or 0.39 percent over Wednesday. Capital inflows did not provide much relief to the rupee, said dealers.

In the previous two sessions, rupee had gained 23 paise.

"The market is getting cautious ahead of the US Fed FOMC meet. The suspense over QE3 is still persisting with the Asian markets closing mixed and European market trading negative," said Abhishek Goenka, CEO, India Forex Advisors.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said the rupee recouped some of its initial losses towards the fag end on renewed hopes of easing by US Fed and expectations of policy action by the Indian government soon.

In Sydney market, the dollar edged down today ahead of the conclusion of a two-day interest rate meeting at the US Federal Reserve, which may result in the central bank changing its interest rate guidance and announcing more bond buying.

In New York market, the euro rose yesterday to its strongest level versus the dollar in nearly five months after Germany's Federal Constitutional Court cleared the way for Berlin to fund its share of any future bailouts.

Meanwhile, the Indian stock market benchmark Sensex ended higher by another 21.13 points at a seventh-month high.

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

The benchmark six-month forward dollar premium payable in February closed down at 160-162 paise from yesterday's close of 164-1/2-166-1/2 paise.

The premium for far-forward contracts maturing in August also ended lower at 311-1/2-313-1/2 paise from 315-1/2-317-1/2 paise.

The RBI has fixed the reference rate for the US dollar at 55.4430 and for euro at 71.6160.

The rupee declined further against the pound sterling to 89.28 from yesterday's close of 88.86 and also remained weak against the euro to 71.54 from 71.28 previously.

The rupee, however, fell back against the Japanese yen to end at 71.33 per 100 yen from last close of 70.92.

PTI