Rupee snaps gaining streak

The rupee snapped its two-week of gaining string and closed down by a whopping 112 paise - biggest weekly fall in last five months - to two-month low of 62.66 against the greenback following heavy dollar demand from importers and weak dollar overseas.

The rupee declined in four sessions out of five during the week. The dollar demand was so strong that firm local equities and sustained capital inflows could not able to stop the rupee fall.

The rupee plunged by 73 paise on Friday as dollar short- coverings by some banks was triggered at 62.45-62.50 level.

Weak in Chinese as well as US manufacturing data and fears of Fed’s tapering plan in its two-day monetary policy meeting on January 28 and 29 also weighed on the rupee at the weekend.

At the Interbank Foreign Exchange market, the domestic unit commenced lower at 61.65 a dollar from last weekend’s close of 61.54 and moved in a wide range of 61.45 to 62.73 before settling the week at 62.66, exhibiting a fall of 112 paise or 1.82 per cent. In last two weeks, it had gained 62 paise or 1 per cent.

Previously, it had slumped by 250 paise or 3.96 per cent in last week of August, 2013.Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "Equities closed on a positive note for the second straight week. But Rupee posted its biggest weekly loss in five month as the month end dollar demand from oil importers weakened rupee.

Also the Fed tapering speculation over a sustained recovery in US dented the rupee movement further. Expect Rupee to depreciate further in next week and trade near 63.00 levels. The trading range for the spot rupee for the week is expected to be within 62.00 to 63.00."

"The dollar traded lower during the week after data showed strength in the euro-zone manufacturing sector in January, beating analysts' expectations and providing further evidence the region is recovering," he added.

The rupee premium for the forward dollar remained weak on sustained receipts by exporters. The RBI fixed reference rate for US dollar at 62.17 and for euro to 85.08 from 61.35 and 83.52 last weekend, respectively.