Mumbai: In step with the weak stock market, the rupee today plunged by 77 paise to end at over one-month low of 62.39 against the dollar on renewed fears that the US Federal Reserve would look at scaling back its stimulus soon.
Dollar buying by banks and importers picked up after data showed yesterday that the Institute for Supply Management's US non-manufacturing index rose to 55.4 in October.
This data spurred hopes that the US economy is beginning to show strong signs of recovery, which would be followed by the Fed tapering its USD 85 billion a month stimulus.
While capital inflows continued to trickle in, forex traders said the domestic currency was weighed down by other factors such as speculation that RBI would soon start winding down its special forex swap window for oil companies.
The rupee resumed lower at 61.93 per dollar as against the last closing level of 61.62 per dollar at the Interbank Foreign Exchange (Forex) Market. It dropped further to close at over one-month low of 62.39 per dollar, showing a loss of 77 paise or 1.25 per cent from its last close.
Today's drop was the sharpest in about two months, dealers said. The rupee moved in a range of 61.82 per dollar and 62.40 per dollar during the day. The rupee had last ended at 62.46 per dollar on October 1, 2013.
“Dollar buying by PSU banks was seen putting pressure on the rupee. Globally, dollar index is seen trading at 80.60 levels and Euro was seen trading flat at USD 1.3500 levels,” said Abhishek Goenka, Founder & CEO, India Forex Advisors.
In the Asia-Pacific region, the rupee was the worst performer as it slid 1.25 per cent versus the dollar today. The Indonesian rupiah slid 0.48 per cent, followed by New Zealand dollar (0.42 per cent down) and Malaysian Ringgit (0.23 per cent).
In the global market, the dollar was quoting lower in the early trade with investors looking ahead to European Central Bank's policy decision. In London, the euro rose to a session-high versus the US dollar today after data showed a much bigger-than-expected uptick in German industry orders.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: “Rupee depreciated over one per cent taking cues from weak local equities which closed down by over half a per cent. Rupee has depreciated for the last three weeks on a weekly basis & is heading towards fourth weekly fall.” Meanwhile the Indian benchmark Sensex dropped by another 79.85 points, or 0.38 per cent, to end at over one-week low of 20,894.94.
Forward dollar premiums closed higher due to payment pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in April ended higher at 246-248 paise as against the last closing level of 241-243 paise.
Far-forward contracts maturing in October also firmed up to 466-468 paise from 456-458 paise previously. The RBI fixed the reference rate for the dollar at 61.9225 and for the euro at 83.6375.
The rupee fell to 100.45 against the pound from 98.90 previously and also dropped to 84.37 per euro from 83.12 per euro. It also dropped against the Japanese yen to 63.29 per 100 yen from to 62.70 yesterday.
