Rupee softens against USD, closes at 64.12

Mumbai: The rupee on Wednesday slipped by 2 paise to close at 64.12 against the US currency due to renewed dollar demand from banks and corporates.

The interbank foreign exchange market saw a listless trade as traders preferred to stay on the sidelines ahead of central banks annual meet at Jackson Hole, dealers said.

Investors are hoping to get hints on future policy path of the US Federal Reserve as chair Janet Yellen and European Central Bank President Mario Draghi will address the meet on Friday.

Sustained unwinding of long positions by FPIs and funds in local equities along with a strong dollar overseas largly weighed on the home currency, a forex dealer said.

The local currency opened higher at 64.04 against last close of 64.10 at the interbank foreign exchange market on sustained selling of dollar by exporters and banks.

But later it struggled to keep the initial momentum against its US counterpart and turned weaker.

After trading in a tight range most part of the day, the local unit retreated sharply to hit fresh low of 64.14 in late afternoon-trade before settling at 64.12, showing a modest loss of 2 paise, or 0.03 percent.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.1272 and for the euro at 75.4072.

A late surge in banking stocks, spurred by Cabinet decision on consolidation of public banks, pulled markets higher today as the Sensex closed up 276 points, in line with a firming global trend. The broader Nifty ended on top of 9,800 again.

The government today decided to set up an alternative mechanism to oversee proposals for consolidation of public sector banks (PSBs) with a view to creating fewer but stronger lenders.

In cross-currency trades, the rupee advanced against the pound sterling to end at 82.17 from 82.18 per pound, but fell back against the euro to finish at 75.66 from 75.38.

It also drifted against the Japanese yen to close at at 58.72 per 100 yens from 58.59 yesterday.

In forward market today, premium for dollar declined due to fresh receivings from exporters.

The benchmark six-month premium payable in January remained steady at 125-127 paise, while far forward July 2018 contract inched down to 260.50-262.50 paise from 261-263 paise.

On the International commodity front, crude prices retreated on growing concerns over supply glut.

Brent crude futures, the international benchmark for oil prices were down 23 cents at USD 51.64 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were at USD 47.59 a barrel, down 24 cents.