Rupee stumbles by 52 paise to close the week at 62.29 against the dollar

Mumbai: After taking a reprieve for a week, the rupee came off from 10-month low but continued its south-bound journey, stumbling by 52 paise to close the week at 62.29 against the greenback on sustained dollar demand from importers on the back sustained fall in oil prices amid bearish local equities.

First four days of the week, the rupee was sluggish but on the last day it recovered at the fag end on dollar selling by exporters and likely some banks on behalf of the central bank. Consistent capital outflows also weighed on the rupee while dollar index was better overseas at five-year high against its basket of major global rivals.

At the Interbank Foreign Exchange, the rupee resumed lower at 6.94 a dollar from last weekend's close of 61.77 and tried to recover to log a high of 61.83. But it could not sustained on weary local bourses and continued dollar demand from importers to a low of 62.5050 --more-than ten-month low when it had touched an intra-trade low of 62.55 on February 6, 2014.

On Friday, it recovered some ground in the last session on probably intervention of the Apex bank through state-run banks and closed at 62.29, still showing a fall of 52 paise or 0.84 pct. Last week, it had risen by 26 paise. The benchmark BSE Sensex registered its biggest weekly loss in three years and tumbled by 1,107.42 points, or 3.89 pct, while FPIs pulled out USD 141.49 million during Tuesday to Thursday, as per Sebi data.

Widening current account deficit due to soaring gold imports mainly put pressure on the Indian unit, impacting negatively on the market.

Meanwhile, macroeconomic data was mixed as retail inflation eases in November but Index of Industrial Production (IIP) contracted in October. "The rupee depreciated on sustained dollar demand from oil importers as they are taking advantage of lower crude oil prices. Brent crude remains below USD 66/barrel," said Suresh Nair, Director Admisi Forex, adding that investors believe that rupee could weaken further as risk appetite has diminished for the emerging market amid worries about Greece and the tepid outlook for China.

Pramit Brahmbhatt, Veracity Group CEO said,"Rupee depreciated the week taking cues from the dollar demand from oil importers which dented the movement of Rupee and forced it to trade almost 10 month low on closing basis. Also the local indices closed on weak note which further wounded the Rupee.

The trading range for the Spot USD/INR pair is expected to be within 62.00 to 62.60." In the forward market, premia dropped further on sustained receivings by exporters. The benchmark six-month forward dollar premium payable in May tumbled to 203.5-205.5 paise from last weekend's close of 217.5-219.5 paise. Far-forward contracts maturing in November 2015 also slumped to 407-409 paise from 428-430 paise.

The RBI fixed the reference rate for the US dollar at 62.4422 and the euro at 77.3846 from 61,8535 and 76.5313 from last weekend respectively. The rupee also fell back sharply to 97.87 against the pound sterling from 96.92 last weekend and also sank to 77.56 per euro from 76.27. It too reveresed its positive trend and crashed to 52.69 per 100 Japanese yen from 51.26.