The rupee on Monday weakened to an intraday low of 67.36 against the dollar, a level last seen on July 8, and closed at a two-week low of 67.35, following month-end demand for the greenback from banks and oil importers. The domestic currency ended lower by 27 paise on Monday. Dealers said the mood was also cautious ahead of the policy meetings of the US Federal Reserve and Bank of Japan scheduled for later this week. The last time the local currency was at this level was on July 8, when the rupee closed at 67.37. Then on, it strengthened to 66.87, which was the opening price on July 15. On Friday, the rupee closed at 67.08 and opened at 67.18 on Monday.
In cross-currency trades on Monday, the rupee dropped against the pound sterling to close at 88.41 from 87.90 and fell against the the euro to settle at 73.97 compared to 73.91 previously. The domestic currency also declined against the Japanese yen to 63.38 per 100 yens from 63.22. Meanwhile, the benchmark Sensex and Nifty indices rose by over 1% each in Monday’s trade to close at 28,095.34 and 8,635.65, respectively. Had it not been for a net buy of equities by foreign portfolio investors, the rupee might have slid further.
Market participants see the rupee remaining subdued in the week to come, primarily because of the month-end dollar demand. However, some dealers said they were confident that the Reserve Bank of India will start selling dollars if the rupee breaches 67.45-67.50 levels. On the upside, they don’t see the rupee strengthening beyond 67.05. Traders will be eyeing the US Federal Open Market Committee’s policy meeting since the market is expecting the US Federal Reserve to keep its rates unchanged. They will also keenly watch Bank of Japan’s policy meet as a monetary stimulus is being expected. The rupee was not the only Asian currency to weaken on Monday. Other major Asian currencies such as the Singapore dollar, South Korean won and Japanese yen too weakened in a range of 0.13%-0.21%.