The rupee broke 60-mark and closed sharply down by 39 paise at 6-week low of 60.16 against the Greenback following sustained dollar demand from importers amid weakness in local equities on the back of rise in wholesale price index (WPI)-based inflation.
Increase in global crude oil prices to nine-month high on escalating Iraq crisis compelled importers, mainly oil refiners, to buy more dollars to meet their requirements, a forex dealer said.
The dollar index was almost stable against a basket of six major global currencies.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 59.82 a dollar from previous close of 59.77 and immediately touched a high of 59.80.
Later, it fell back to a low of 60.23 before settling at 60.16, a fall of 39 paise or 0.65 pct. Last Friday, it has tumbled by 52 paise or 0.88 pct.
Previously, it had finished at 60.21 against the USD on May 5, 2014.
The Indian benchmark S&P BSE Sensex today declined by another 37.69 points or 0.15 pct while FIIs brought shares worth Rs 1,099.92 crore last Friday, as per provisional data.
Mr. Pramit Brahmbhatt, Veracity Group CEO said,”WPI rushed forward to a five month high which forced Rupee to trade to its lowest level since May 5. Already rupee was trading weak on the growing tensions in Iraq. In two days Rupee has depreciated nearly one and half percent including today?s session. The trading range for the Spot USD/INR pair is expected to be within 59.70 to 60.80.
Mr. Abhishek Goenka, Founder and CEO, India Forex Advisors said,”Rupee was seen hitting its one and a half month low against the US dollar and was seen breaching the key level of 60.00 today. It had opened the session on a weaker note amid surging oil prices which threatened to worsen the country’s current account deficit. India imports two?third of its oil requirements leaving rupee vulnerable to changes in the oil prices. Adding to the weakness in the rupee was India?s WPI for the month of May accelerated to a five-month high of 6.01 percent.”
The premium for forward dollar remained weak on continued receipts by exporters.
The benchmark six-month premium payable in November eased to 227-229 paise from Friday’s close of 228-230 paise.
Far-forward contracts maturing in May, 2015 also declined to 462-464 paise from 467-1/2-469-1/2 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.0059 and for the euro at 81.2541.
The rupee dipped further to 102.07 against pound to 102.07 from 101.31 previously and also plunged against the euro to 81.46 from 80.87. It dropped to 59.09 per 100 Japanese yen from 58.59.