Rupee at 6-week low, falls 16 paisa on sustained dollar demand

Tracking fag-end selling in stocks, the rupee today surrendered initial gains to close with a loss of 16 paise at nearly six-week low of 55.23 against US dollar amid sustained demand of the US currency from oil companies.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced at 55.00 as against last Friday's close of 55.07 but recovered immediately to a high of 54.90 on initial rise in local stocks.

However, it could not maintain its gains and fell back to a low of 55.31 on heavy demand dollar demand from oil importers. It finally ended at 55.23, a fall of 16 paise or 0.29 per cent. These levels were not seen since November 27, 2012 when rupee had closed at 55.45 against US dollar.

"There are two drivers why rupee is falling. The worry on current account gap and minimal FII play in stocks. These are now playing out on participants' minds...Oil demand is also a factor. Unless matching FII inflows come, rupee will always be under pressure," said Moses Harding, Head - ALCO and Economic & Market Research, IndusInd Bank.

Immediate resistance for rupee is seen at 55.35 level, said Abhishek Goenka Founder & CEO India Forex Advisors.

The BSE benchmark Sensex today washed out all of its early gains and dipped by 92.66 points or 0.47 per cent, breaking a four-day gaining streak.

The dollar index, a gauge of six major global rivals, was up by 0.10 per cent.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The rupee extended its last weekend's weakness during the first session of the week surpassing the previously registered lows tracking weak domestic equity markets and rising dollar index."

India's current account deficit (CAD) widened to record 5.4 per cent of GDP in the July-September quarter. A higher CAD has adverse impact on rupee value and affects foreign exchange reserves as well.

... contd.

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