Indian rupee drops to 2-wk low vs dollar after Fed sticks to low rates

Written by PTI | Mumbai | Updated: Oct 31 2014, 02:12am hrs
Moving in opposite direction to stocks, the rupee today fell for the fourth day, dipping 10 paise to close at two-week low of 61.45 against the Greenback after US Federal Reserve kept in place its plans to maintain record low interest rate for some more time.

While the Fed's bond buying programme came to an end as expected, the continuation of ultra low interest rate regime lifted the dollar overseas against major currencies, thereby keeping the rupee under pressure, a forex dealer said.

At the Interank Foreign Exchange (Forex) market, the domestic unit commenced sharply lower at 61.52 a dollar from previous close of 61.35. It later moved in a narrow range of 61.39 and 61.55 before concluding at 61.45, showing a fall of 10 paise or 0.21 per cent.

In four days, the rupee has dipped by 21 paise or 0.37 per cent to end at its weakest level since October 16 (61.83).

The Indian benchmark S&P BSE Sensex today spurted by 248.16 points, or 0.92 per cent, to end at all-time high of 27,346.33. FIIs bought shares worth USD 123.13 million yesterday, as per Sebi data.

The dollar index was trading higher by 0.26 per cent against its major global rivals after Fed yesterday made official its plans to end the last round of its recession-era stimulus programme while reiterating its stance of keeping its interest rate low.

Pramit Brahmbhatt, Veracity Group CEO said: "Rupee traded weak as month-end dollar demand from importers. However, rupee trimmed its initial losses on good foreign capital inflows into equity market....The trading range for the Spot USD/INR pair is expected to be within 60.90 to 61.90."

The depreciation of the rupee was limited as investors believe that the Indian markets have been performing fairly better than other countries, said Suresh Nair, Director, Admisi Forex India Pvt Ltd.

In the forwards market, premium dropped on fresh receipts by exporters.

The benchmark six-month premium payable in March dipped to 191.193 paise from 198-200 paise previously and far-forward contracts maturing in September, 2015 also tumbled to 417.5-419.5 paise from 428.5-430.5 paise.

The Reserve Bank of India fixed the reference rate for dollar at 61.4636 and for the Euro at 77.4503.

The rupee recovered against the pound to 98.32 from 98.87 yesterday and also recouped to 77.37 per euro from 78.14.

It too rebounded to end at 56.38 per 100 Japanese yen from 56.76.