Rupee falls 40 paise against dollar (Forex Trading House)
The Indian rupee on Wednesday fell sharply by 40 paise to close at 49.70/71 against the dollar following weakness in local equity markets amid dollar demand from banks. However, the market ignored the weak dollar overseas and sustained capital inflows. In active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit resumed higher at 49.25/28 a dollar and immediately touched a high of 49.23.
It later reached a low of 49.72 per dollar before concluding the day at 49.70/71, a fall of 0.81 per cent over its previous close of 49.30/31. The rupee was up by 20 paise on May 12. Forex dealers attributed the fall in the rupee to sell-offs in local equity markets amid uncertainty on the general election results due on May 16. The Indian benchmark Sensex ended lower by 138.38 points or 1.14 per cent. Besides Hong Kong, other Asian markets ended better. Dollar buying by state-run banks, mainly by oil refiners, also put pressure on the rupee. Global crude oil prices were trading over $59 a barrel in Asian trade on Wednesday.
Contrary to market sentiment, the dollar hit a four-month low against a basket of currencies. Despite good buying by foreign institutional investors (FIIs), the rupee fall could not be stemmed. The Reserve Bank of India (RBI) fixed the reference rate for the US dollar at Rs 49.34 and the euro at Rs 67.53. Rupee premiums on the forward dollar ended higher on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in October ended up at 66-1/2-68-1/2 paise from 65-1/2-67-1/2 paise Tuesday and the far-forwards maturing in April also finished higher at 111-1/2-113-1/2 paise from 108-110 paise previously. In cross-currency trade, the Indian rupee recovered slightly against the pound sterling while dropped further against the euro and the Japanese yen.
The rupee ended higher against the pound sterling to Rs 75.23/25 from its last close of Rs 75.33/35 while dipped against the euro to Rs 67.76/78 from yesterday’s close of Rs 67.32/34. It also tumbled against the Japanese yen to settle the day at Rs 51.82/84 per 100 yen from previous close of Rs 49.66/68.
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