Rupee dips 54 paise to 63.37 vs dollar ahead of US Fed meet

The rupee today fell 54 paise to end at 63.37 against the dollar, the biggest drop in two weeks, on fresh demand for the US currency from importers ahead of the Federal Reserve's two-day policy meeting.

The fall was restrcited by a drop in the value of the dollar overseas, positive local equities and capital inflows, a forex dealer said.

At the interbank foreign exchange market, the local currency resumed at 63.37 to the dollar from the previous close of 62.83. It moved in a range of 62.95 and 63.6450 before settling at 63.37, a fall of 54 paise or 0.86 per cent.

It was the biggest drop for the rupee since September 3, when it fell 163 paise to 67.63 against the dollar. It had gained 67 paise during the previous two sessions.

"On the domestic front, yesterday's inflation numbers have dented sentiment," said Abhishek Goenka, CEO of India Forex Advisors. "Going ahead, the two-day FOMC meeting starting today and the RBI monetary policy on September 20 will be driving the markets."

The rupee trimmed gains yesterday after the government said inflation as measured by the wholesale price index was 6.1 per cent in August, the fastest pace in six months.

The Federal Open Market Committee (FOMC) meeting starts today and investors expect a decision on a reduction in the pace of its bond-buying programme. The dollar index, a gauge of six major global rivals, was down 0.15 per cent.

Domestic stocks were choppy and the benchmark S&P BSE Sensex ended 61.56 points higher. Overseas investors injected a net USD 50.22 million in stocks yesterday, as per data from the Securities and Exchange Board of India.

"The trading range for the spot USD-INR pair is expected to be within 63 to 64," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

Forward dollar premiums were mixed. The benchmark six-month forward dollar premium payable in February eased to 257-1/2-262-1/2 paise from Friday's close of 258-263 paise while far-forward contracts maturing in August edged up to 462-467 paise from 461-466 paise.

The RBI fixed the reference rate for the dollar at 62.4840 and for the euro at 83.4960.
The rupee was at 100.08 against the pound from 100.32 previously and hardened to 83.92 per euro from 84.34.

It improved against the Japanese yen to 63.55 per 100 yen from 63.66.