Rupee tanks to over 8-month low dollar demand from oil firms

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Mumbai | Published: November 20, 2014 8:07:11 AM

Rupee extended its losses for the fifth session in a row and ended at eight and a half month low of 61.96 against US dollar.

Rupee's closing on Wednesday was weakest since finishing at 62.04 on March 3. Rupee?s closing on Wednesday was weakest since finishing at 62.04 on March 3.

The rupee on Wednesday extended its losses for the fifth session in a row and ended at eight and a half month low of 61.96 against the US dollar as global gains in the currency ahead of the release of US Federal Reserve minutes, and slumping crude prices, prompted oil firms to step up purchases.

According to a dealer, slowdown in foreign capital inflows also weighed on rupee that ended 22 paise lower while the dollar index was trading almost stable against six major currencies.

This was its weakest closing since finishing at 62.04 on March 3. It had also logged intra-day low of 62.15 on March 4. The Fed minutes come amid rising expectations the US central bank is moving towards eventual rate hikes, in contrast to the European Central Bank or the Bank of Japan.

The rupee fall came after the dollar hit a fresh seven-year high against the yen on Wednesday, and held near a 14-month peak versus the pound sterling. The yen fell as low as 117.655 to the dollar, its weakest since October 2007, and was last close to that low at 117.605, down 0.7 per cent.

The fall in the Sensex also impacted the rupee sentiment. Foreign portfolio investors sold shares worth net Rs 101.98 crore on Tuesday, according to provisional data. The rupee has weakened by 45 paise in five straight days.

The Fed is expected to raise interest rates at some point in 2015 as the US economic recovery broadens, but markets will be looking closely at the minutes for signs of timing of the first rate hike.

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