Tuesday 14 August 2007

Rupee closes at 6-week low

The rupee on Tuesday fell by 12 paise to close at a six-week low of 40.7450/7550 against the US dollar on fresh dollar demand amid a firm dollar overseas.

Capital outflows and some downward pressure on the Asian markets, including India, also weighed on the rupee.

In active trade at the Interbank Foreign Exchange (forex) market, the local currency opened slightly lower at 40.64/66 from yesterday's close of 40.6250/6350 per dollar.

It later tumbled further to settle at a six-week low of 40.7450/7550 per dollar. It gyrated in a range of 40.62 and 40.77 a dollar. Previously, the rupee had ended at 40.83/84 a dollar on June 28, 2007.

Sustained dollar demand from state-run banks and oil refiners in the face of absence of supplies from exporters mainly put pressure on the rupee, forex dealers said.

The dollar on Monday reached its strongest level in more than a month against the Euro and was also firm against other major currencies, boosting the dollar sentiment. Higher than expected US retail sales report for July also lent support to the dollar in overseas market.

Lacklustre equity markets with downward bias also dampened the rupee sentiment further as dealers expect more more capital outflows in near term. After being net sellers in the last two weeks, Foreign Institutional Investors (FIIs) pulled out USD 101 million on August 13