Rupee falls 23 p on dollar selling, weak equities

Written by Press Trust of India | Mumbai | Updated: Feb 27 2013, 07:08am hrs
Falling for the first time in three days, the rupee on Tuesday lost 23 paise to end at 54.09 due to month-end dollar demand and a steep fall in local equities.

Rupee commenced lower at 54.03 a dollar against Mondays close of 53.86 at the Interbank Foreign Exchange (Forex) market. Later, it moved in a tight range of 54.00-54.22 before ending at 54.09, a fall of 23 paise, or 0.43%. In last two sessions, it had gained 87 paise, or 1.6%.

Forex dealers said, however, some capital inflows and weak dollar overseas cushioned rupee's fall to some extent. Rupee completely followed the local equity markets' trend. Fears over the Italian election results, which might hit the euro-zone crisis, also affected the trading sentiment here," said Ashtosh Raina, chief dealer at HDFC Bank.

He added the forex market is expecting some positives on containing the fiscal deficit and borrowing side, which might boost the rupee sentiment. "Rupee will move in the 53-55 range this week," Raina said.

Foreign institutional investors bought local equities worth nearly $14 million (R74.68 crore), according to the BSE provisional data.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "Rupee ended the day on a weaker note. The rupee lacked clarity from most parts of the day today, hovering in a band 22 paise. No clear cues were seen ahead of the crucial Budget to be unveiled on February 28."

The rupee was under pressure. The Railways budget disappointed the markets as the government proposed a hike of 5% in the freight rate. This pressurised the Indian stock markets and the rupee, said Abhishek Goenka, Founder and CEO, India Forex Advisors. The premium for the forward dollar declined further on persistent receipts by exporters. The benchmark six-month forward dollar premium payable in July settled weak at 167-169 paise from 169-1/2-171/1-2 paise.