Continuing its decline for the fourth straight session, the rupee on Friday tumbled 30 paise to touch a fresh two-and-a-half-month low of 55.51 against the US dollar on sustained demand for the American currency from importers and some banks.
Forex dealers said the rupee sentiment was hit by investor concerns over economic reforms as Parliament was adjourned for the second day today. Even sustained capital inflows and weak dollar overseas could not able to stem the rupee fall, they added.
The domestic unit opened a tad higher at 55.20 at the Interbank Foreign Exchange (Forex) market against the dollar from last close of 55.21 and immediately touched a high of 55.18 on early rise in local equities.
However, it failed to maintain the upward momentum and fell back sharply to a low of 55.61 on continued month-end dollar demand from importers, mainly oil refiners, and some banks. It finally closed at 55.51, a net loss of 30 paise, or 0.54%, from its last close.
The rupee has plunged by 45 paise, or 0.82%, in the last four sessions. The last time rupee plunged to this level was on September 6 when it had settled at 55.66. "Volatility in the euro which fell below 1.29 today from 1.36 in the beginning of the week against the dollar and widening of the domestic trade deficit mainly weighed down on the rupee. Import bills of oil going up also hit the local unit," Dhanlaxmi Bank Executive Vice-President (Treasury) Srinivasa Raghavan said.
The dollar index was down by 0.12% against a basket of six major rivals, while New York crude oil was quoting above USD 87 a barrel in Europe today.
"The rupee continued to weaken on political ruckus created in Parliament defying the positive sentiments of global markets due rising risk on," Alpari Financial Services (India) CEO Pramit Brahmbhatt said.
"The rupee ended to its two and a half month low as there were hopes of sustained dollar demand from oil refiners. The weakness in rupee was not supported by the dollar which was trading below 81 and the euro surpassed the level of 1.2900. Still, rupee did not see any signs of appreciation," Abhishek Goenka, Founder and CEO, India Forex Advisors said.
"The rupee was seen falling heavily despite continued weakness in the US dollar and recovery in the Euro. This indicates that there was a genuine demand for the dollar in the market. Going forward, if some positive reforms