Rupee falls 36 paise to 62.93 vs dollar on fresh taper worries

The rupee fell for the second day against the dollar today in tandem with local equities, losing 36 paise to 62.93 as indications of an imminent tapering by the Federal Reserve strengthened the US currency.

Lower stock purchases by foreign institutional investors and sustained dollar demand from importers, mainly oil refiners, also put pressure on the rupee, a forex dealer said.
At the interbank foreign exchange market, the rupee opened weak at 62.85 a dollar from 62.57 previously and moved in a tight range before ending at 62.93, a fall of 36 paise or 0.58 per cent. Yesterday, it declined 21 paise or 0.34 per cent.

In New York, the dollar rose against the euro after Federal Reserve minutes showed the pace of monthly bond purchases may be trimmed in the coming months as the economy improves. The dollar index, consisting of six major global units, was up 0.11 per cent.

Data released yesterday showed US retail sales in October jumped 0.4 per cent.
"Rupee was seen depreciating against the US dollar in the opening itself due to strength in the US dollar. Gains in US dollar are attributed to the retail sales data, which beat expectations despite the government shutdown," said Abhishek Goenka, CEO of India Forex Advisors.

Asian currencies were weak due to strong US data and the FOMC minutes released yesterday, Goenka said.

The 30-share benchmark Sensex plunged 406.08 points or 1.97 per cent today. Overseas investors picked up shares worth a net Rs 80.4 crore yesterday, as per provisional data. They had bought a net Rs 1,014.61 crore of shares a day earlier.

"Rupee depreciated over half per cent, taking cues from strong dollar, which...gained after the minutes from the US Federal Reserve's October policy meeting suggested that the central bank could soon move to taper monetary stimulus," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

The benchmark six-month forward dollar premium payable in April closed at 244-246 paise from 244-1/2-245-1/2 paise yesterday and far-forward contracts maturing in October rose further to 490-492 paise from 485-487 paise previously.

The RBI fixed the reference rate for the dollar at 62.8895 and for the euro at 84.4180.

The rupee remained weak against the pound to end at 101.44 from 100.99 previously. It recovered to 84.51 per euro from 84.63 and rebounded to 62.40 per 100 Japanese yen from 62.66.