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Rupee snaps two-day rally, down 16 paise at 54.36 vs US dollar

Nov 08 2012, 19:54 IST
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SummaryTracking weak global markets and euro's fall to a two-month low, the rupee today cut short two-day rally losing 16 paise to settle at 54.36 against the US dollar on heavy demand for the American currency from banks and importers.

Tracking weak global markets and euro's fall to a two-month low, the rupee today cut short two-day rally losing 16 paise to settle at 54.36 against the US dollar on heavy demand for the American currency from banks and importers.

While the US dollar continued to steam ahead, buoyed by jitters over Europe's debt crisis, sustained capital inflows worth USD 50 million from FIIs restricted the rupee's fall to some extent, said forex dealers.

At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed sharply lower at 54.55 a dollar from overnight close of 54.20. It immediately dropped further to a low of 54.67 on heavy dollar demand from importers and early steep fall in local stocks.

Later, rupee recovered on smart rebound in domestic stock market to a touch a high of 54.31 before finishing at 54.36 – still showing a fall of 16 paise or 0.30 per cent. pct. In last two days, rupee had surged by 41 paise or 0.75 per cent.

"The rupee's fall can be attributed to weak global markets and the steep fall in Euro against the dollar," said Ashtosh Raina, Head - Forex Trading, HDFC Bank.

The euro remained under pressure, falling to over USD 1.27, its lowest intraday level since September 7, but was eased a tad higher after reports said the Greek parliament passed USD 17 billion package of extra austerity measures.

Traders said the rupee could not sustain yesterday's momentum today after US equity markets sharply fell.

The dollar index was up by 0.16 per cent against a basket of six major global rivals while New York crude oil was quoting above USD 85 a barrel in Europe today.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," The rupee traded on a mixed note tracking risk aversion sentiments in global markets".

Meanwhile, the Indian stock market benchmark Sensex, which was down by nearly 166 points in early stages, recovered later to close down by only 56.15 points.

"The Greece factor also weighed on the single currency even though after passing of the austerity vote," Brahmbhatt added.

On the rupee outlook, Abhishek Goenka, Founder & CEO, India Forex Advisors said: "We expect the market to remain volatile ahead of the key events lying in the month of November which include India's IIP and inflation data followed by GDP at the month end."

Meanwhile, the premium for the forward dollar closed sharply lower on fresh receipts by exporters.

The benchmark six-month forward dollar

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