Rupee falls six paise to 61.91 against dollar

The rupee fell six paise to 61.91 against the dollar today on month-end demand for the US currency from importers amid a sluggish equity market.

Stocks declined amid profit booking and caution after the Reserve Bank of India said any political instability after next year's general election would hurt the economy further.

The RBI also said the country is ready for the US Federal Reserve's tapering and pegged the current account deficit at below 3 per cent for this financial year, according to the central bank's eighth Financial Stability Report.

The rupee opened lower at 62 a dollar against the previous close of 61.85 at the interbank foreign exchange market and hovered in a range of 61.8850 to 62.16 per dollar before ending at 61.91, a drop of six paise or 0.10 per cent.

"The rupee was seen trading in a thin range today... It was seen opening on a weaker note amid stable Dollar Index. However, the volume was thin. Weakness in the local equity markets also pressurised the rupee. Majority of the Asian currencies were seen trading on a weaker note," said Abhishek Goenka, CEO of India Forex Advisors.

Month-end dollar demand from importers, mainly oil companies, affected the rupee, a forex dealer said.

"Dollar demand from oil importers weakened the rupee but the fall was capped as the dollar index traded weak in the global market and helped the rupee to end near the weekend's close," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

The 30-share benchmark Sensex opened strong today only to end 50.57 points lower at 21,143.01.

Forward dollar premiums remained weak on sustained receipts by exporters.

The benchmark six-month forward dollar premium payable in May moved down to 221 to 222-1/2 paise from last Friday's close of 225-226 paise and far-forward contracts maturing in November declined to 462-1/2 to 464 paise from 468 to 469-1/2 paise.

The RBI fixed the reference rate for the dollar at 62.0028 and for the euro at 85.1855.

The rupee recovered to 101.97 against the pound from last weekend's close of 102.15 and to 85.20 against the euro from 85.53.

It improved to 58.89 per 100 Japanese yen from 59.01.