Rupee falls 41 paise against dollar

Street expects further weakening

The rupee fell its most in one-and-a-half months on Thursday as global risk aversion pushed domestic stock markets lower. The street expects it to weaken further and touch Rs 55 per dollar soon amid month-end dollar demand. The currency awaits cues from the Union Budget next week.

The rupee closed at 41 paise lower against previous close at Rs 54.48 per dollar. “The fall was primarily due to bearish domestic equity market sentiments,” said Akhil Thomas, assistant manager (forex), Federal Bank.

Global risk assets were pummeled as world share markets fell and the dollar and safe-haven assets rose, a day after minutes of the Federal Reserve's last policy meeting cast doubts over how much longer the U.S. central bank would stick to its stimulus plan.

The sell-off was reflected in domestic markets as shares fell their most in nearly seven months, raising concerns about whether there will be continued inflows into equities that have largely buoyed the rupee so far.

According to Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai the fall in rupee was also due to supply constraint as public sector bank employees continued their strike.

The rupee had opened at Rs 54.37 against the dollar. During the day it had touched a high of Rs 54.30 and had weakened to Rs 54.63 per dollar.

Month end importers demand also kept the rupee under pressure against the greenback, said dealers.

The street expects the rupee to weaken further and soon hit Rs 55 per dollar. “Month end oil purchases coupled with gold imports will weaken the rupee further,” said Thomas.