Rupee falls marginally to 54.35 Vs US dollar

Rupee falls marginally to 54.35 Vs US dollar Mumbai: Falling for the second straight day, the rupee on Thursday declined by five paise to end at 54.35 as US dollar demand exceeded supply, amid renewed speculation that RBI will cut interest rates next week.

Strong dollar overseas after February US retail sales exceeded forecasts also weighed on the rupee even as a sharp recovery was seen in local stocks, a forex dealer said.

Initial dollar selling by exporters was totally offset by late dollar demand from importers and some banks, he added.

At the Interbank Foreign Exchange (Forex) market, the rupee commenced lower at 54.36 a dollar from last close of 54.30. It later traded in a range of 54.17 and 54.53 on alternate bouts of buying and selling. The rupee finally closed at 54.35, a fall of five paise or 0.09 paise.

Yesterday, it had declined by 12 paise or 0.22 percent.

The Indian benchmark Sensex, which down by over 180 points in morning deals, rebounded to settle up by 207.89 points or 1.07 percent, breaking three-day string of losses.

While inflation based on WPI marginally rose to 6.84 percent in February, core inflation fell below the 4.0 percent mark for the first time in past 35 months, strengthening the case for a repo rate cut by the RBI on March 19.

"The rupee was seen appreciating during the intra-trade on account increasing expectation of rate cut in the up-coming RBI monetary policy. But the increasing strength of dollar index internationally washed out the gains in rupee," said Abhishek Goenka, Founder and CEO, India Forex Advisors.

The dollar index was up by over 0.2 percent against a basket of six major global rivals.

Foreign Institutional Investors (FIIs) invested Rs 303.83 crore yesterday, as per provisional data with stock exchanges.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The rupee closed slightly weak taking a cue from firm dollar index overseas. Expect Rupee to trade within 53.90 -54.50 (Spot)."

Meanwhile, the premium for the forward dollar dropped further on persistent receipts by exporters.

The benchmark six-month forward dollar premium payable in August declined to 175-177 paise from overnight close of 180-1/2-182 paise.

Far-forward contracts maturing in February too dipped to 335-337 paise from 341-343 paise.

The RBI fixed the reference rate for the US dollar at 54.4420 and for euro at 70.5005.

The rupee recovered slightly against the pound sterling to 81.18 from yesterday's close of 81.22 and also bounced back against the euro to 70.20 from 70.60.

It firmed up against the Japanese yen to 56.35 per 100 yen from previous close of 56.73.

PTI