Rupee weakens further to 66.89, down 8 paise

A rise in the dollar on Friday to touch a seven-month high against a basket of currencies driven by buoyant expectations of a US interest rate hike this year mainly weighed on the forex trade.

By: PTI | Mumbai | Published:October 21, 2016 7:00 pm
Rupee, rupee rises against the dollar, dollar, RBI growth comments, growth rate, business news, economy news Value of rupee currently stands at 66.89 against the dollar (Representational Picture)

Falling for the second-straight session, the rupee today depreciated by 8 paise to end at 66.89 against the US dollar due to increased demand for the American currency from importers and state-owned banks.

A rise in the dollar on Friday to touch a seven-month high against a basket of currencies driven by buoyant expectations of a US interest rate hike this year mainly weighed on the forex trade.

Lacklustre domestic equities alongside ongoing FCNR redemptions further added pressure on the local currency, a forex dealer said.

Though, the trading largely remained range-bound in the absence of any market-moving factors, ahead of the weekend. The domestic currency opened substantially lower at 68.89 from Thursday’s closing value of 66.81 at the Interbank Foreign Exchange market.

After moving in a tight band throughout the session, it finally settled at 66.89, revealing a fall of 8 paise, or 0.12 per cent. It moved between 66.8350 and 66.9450 during the day. In worldwide trade, the greenback rose to its highest since March against all major emerging market currencies.

Pound sterling continued to lose ground for the third straight session after European Central Bank Governing Council decided to leave key interest rates unchanged at overnight meeting, but kept the door open to more stimulus in December.

The euro plunged to a seven-month low. The dollar index, which measures its broader strength against a basket of currencies, was sharply up by 0.31 per cent at 98.59.

The RBI today fixed the reference rate for the dollar at 66.8943 and euro at 72.9750. In cross-currency trades, the rupee hardened further against the pound sterling to finish at 81.65 as compared with 81.94 and also firmed higher to close at 72.86 from 73.38 earlier.

However, it fell back modestly against the Japanese yen to end at 64.47 from 64.44 per 100 yens earlier. Meanwhile, bourses had a volatile day after a brief recovery on the back of fresh profit-taking as disappointing Q2 earnings results from index heavyweight Reliance Industries largely weighed on trade.

The benchmark BSE Sensex dropped 52.66 points to end at 28,077.18, while the broader Nifty was down 6.35 points to 8,693.05. Foreign portfolio investors (FPIs) were modest buyers in yesterday’s trade and bought shares worth a net Rs 7.30 crore.

In the forward market, premium for dollar firmed up on fresh paying pressure from corporates. The benchmark six-month premium for March inched higher to 152.5-154.5 paise from 151-153 paise and the forward-September 2017 contract also rose to 328-330 paise from 325-327 paise yesterday.

Crude prices regained some lost ground after having witnessed a massive sell-off a day before during the European session on Friday following Russia’s pledge to freeze oil output amid cautious stance due to speculation over OPEC’s production output cap. Brent crude was trading firmly higher at USD 51.50 a barrel.