Rupee touches 14-month low

The rupee breached the 46 mark vis-à-vis the dollar today on month-end demand for the greenback. The Indian unit touched 46.01/02 triggering dollar selling by the Reserve Bank of India (RBI) through nationalised banks.

It closed the day at 45.96/97, down from Rs 45.81/82 on Friday. This is the rupee's lowest close since September 29, 2004, when it ended at 46.00/46.01. The rupee had tested the 46-a-dollar level earlier this month as the dollar kept rising against major global currencies.

Typically every month end, there is huge demand for the greenback from corporates, including oil companies, to meet their routine payments which weighed on the rupee, dealers said.

Even as the local stock indices have touched new highs, it is not providing much comfort to the local currency. "There are other concerns like strong dollar versus other global currencies which is ruling the rupee's movement now," said a chief dealer with a private sector bank.

Analysts maintain a bearish outlook on the local currency on account of burgeoning trade deficit and narrowing interest rate differentials between the US and India.

The dollar has steadily gained this year on the back of a widening yield advantage, which was further raised with the recent hike in Fed rate to 4 per cent. The dollar is expected to strengthen further as we step into the new year, dealers said.