Rupee plunges 24 paise to 65.38 on dollar surge
Falling for the second session, the rupee today depreciated by another 24 paise to end at 65.38 against the US dollar on persistent demand for the American currency from importers and banks.
Resurgent dollar overseas alongside continued capital outflows predominantly weighed on the local forex market, though a spectacular recovery rally in equity markets largely restricted the intensity of downtrend.
Robust demand for the American currency from domestic oil firms and foreign banks likely on behalf of clients also dampened rupee trade. At the Interbank Foreign Exchange (forex) market, the home currency resumed substantially lower at 65.22 compared to Thursday’s close of 65.14.
It kept on descending as trading progressed and hit a fresh intra-day low of 65.3950 in late afternoon deals before finishing the day at 65.38, revealing a steep loss of 24 paise, or 0.37 percent.
On a weekly basis, the rupee lost a modest 10 paise, marking its fourth-straight weekly slide. The RBI, meanwhile, fixed the reference rate for the dollar at 65.2276 and for the euro at 76.2641.
On Thursday, the rupee had weakened by 13 paise.
In the meantime, domestic equities staged a remarkable recovery after a brief overnight lacklustre session as investors indulged in buying activity ahead of the outcome of the GST Council meet later in the day.
Asian stock markets also managed gains across the board Friday thanks to yet another record US close.
The benchmark Sensex jumped over 222 points to end at 31,814.22, while Nifty surged 91 points at 9,979.70.
Foreign fund outflows stood at Rs 656.50 crore yesterday, according to provisional data from exchanges.
Meanwhile, the US dollar bounced back after a brief corrective pause and hit seven-week highs against its major counterparts after Congressional lawmakers passed a blueprint pushing President Donald Trump’s tax reform plans.
The dollar index, which measures the greenback’s value against a basket of six major currencies, was higher at 94.08 – its strongest level since August 17 when it traded at 93.96.
In cross-currency trades, the rupee maintained its rally against the pound sterling to finish at 85.57 from 85.77 per pound and rebounded against the Japanese yen to settle at 57.87 per 100 yens from 57.92 earlier.
The local currency, however fell back against the Euro to close at 76.55 from 76.51 yesterday.
Elsewhere, the euro and the British pound showed little sign of recovery from their current weakness as chaotic UK politics continued to stoke Brexit-related jitters.
In forward market today, premium for dollar recovered on the back of fresh paying pressure from corporates. The benchmark six-month premium payable in March moved up to 130-132 paise from 128.00-130.00 paise and the far forward August 2018 contract also edged up to 268.50-270 paise from 267-269 paise yesterday.
On the international energy front, crude prices traded largely unchanged on Friday amid growing worries of oversupply concerns led the market lower, snapping a multi-week bull run that was Brent’s longest in 16 months.
The prospect of extended oil production cuts by the Organisation of the Petroleum Exporting Countries and other producers led by Russia had supported prices in recent sessions.
Global benchmark Brent crude futures were up 7 cents at USD 57.07 a barrel in early Asian trade.
US West Texas Intermediate (WTI) crude was at USD 50.59, down 20 cents.