The rupee on Tuesday weakened to its eight- month low against the US dollar as the greenback continues to strengthen against the euro. The local unit fell to 47.70 against the dollar compared with a close of 46.98 on Monday. The currency hit a low of 47.75 during the day and a high of 47.20. Last year in October 1, 2009, the rupee had hit 47.76.
Dealers in the currency market point out that in the wake of the European debt crisis, investors are seeking the safety of US dollar and have shifted their investment towards US assets. That is leading to a stronger dollar and therefore, a weaker rupee.
According to dealers, foreign institutional investors have been buying dollars as they sell equities and remit the money. On Tuesday, the BSE Sensex fell 447 points to close at 16,022 on the BSE. All other Asian indices too were down.
FIIs have been the net-sellers for the few days. They net-sold Rs 1,464.19 crore (provisional) on Tuesday, Rs 995.32 crore on Monday and Rs 1,540.32 crore on last Friday, according to the BSE data.
Dealers added that some companies were buying dollars to pay for imports. ?One petroleum major and a big business conglomerate were buying dollar all along the trading session,? said the chief dealer of a south based PSB.