Mumbai: Breaking straight four-week of smart rally, the Indian rupee reacted downwards by 31 paise to close at more-than one-week low of 53.50 against the Greenback due to fresh dollar demand from importers amid bearish local stocks.
Heavy foreign funds inflow in equities, however, made a feeble attempt to restrict the rupee fall, a dealer said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced higher at 53.02 and logged its over 3-1/2-month high of 52.89 on Wednesday following hefty dollar inflow in local share markets as also recovery in the Euro after better-than-expected UK services PMI numbers.
However, the recovery could not be sustained as sluggish equities amid fresh dollar demand from importers later weighed on the rupee and it fell back to a low of 53.6525 before settling the week at 53.50, displaying a fall of 31 paise or 0.58 pct. In last four-week of gaining string, it had spurted by 188 paise or 3.41 percent.
The Indian benchmark Sensex finished the week down by 286.42 points or 1.45 percent, extending losses for the 2nd week while Foreign Institutional Investors (FIIs) injected a massive USD 2.55 billion in equities (primary and secondary markets) in the first four days of the week, as per Sebi data.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt. Ltd. Said, "After a firm start the rupee lost some on the first day of the week after which it regained on Tuesday, but continued to lose its ground till the last day ending. The global factors continued to dominate the risk sentiments in both world and domestic markets where the local equities posted its weakest close of 2013.
"The government and its agencies forecast the weakest GDP numbers for FY2012-2013 which became a drag on domestic equities and the currency markets.
"This is the lowest of all growth projections issued by the government and the RBI. The 3.5 per cent drop in nations food production due to drought and scarce rainfall in 2012 -2013 shall add pressure on food prices thereby triggering inflation at base levels," he added.
"The recommendations of K U B Rao's committee to promote gold back financial products which put the idle gold into use has been a welcome move while the RBI seeks to curb gold imports whenever possible to reduce the CAD fared well with the markets which erased part of its loses and remained steady.
"The planning panel statement of completing the diesel price under recoveries by 2015 was though positive but the overall slowdown in growth weighed on INR which ignored the strengths of other currencies and made its way weaker," he further said.
"The rupee posted a negative close after rising for the four consecutive weeks. A twin strategy can be adopted where a rise towards 53.40 levels can be sell with a stop loss above 52.90 targeting 54.20 levels Or a fall towards 54.30 can be used as a buying opportunity with a stop loss below 54.80 levels targeting 53.20 - 53.00 levels whichever comes first.
"Strong resistance is placed at 53.10 - 52.90 levels whereas support is pegged at 53.90 - 54.30 and 54.50 levels," Brahmbhatt added.
The RBI fixed the reference rate for US dollar and euro at 53.5695 and 71.7850 from 53.3238 and 72.6296, respectively, last weekend.
The rupee premium for the forward dollar ended lower on fresh receiving by exporters.
The benchmark six-month forward dollar payable in July finished down at 179-1/2-180-1/2 paise from last weekend's level of 184-186 paise and far-forward contract maturing in January also declined to 340-342 paise from 345-347 paise last weekend.
The rupee fell back against Pound Sterling to end the week at 84.31 from preceding weekend's level of 84.17 and also reacted downwards against the Japanese Yen to finish at 57.93 per 100 yen from last weekend's level of 57.75.
However, it bounced back against the Euro to close at 71.75 from last weekend's level of 72.60.