JOIN USHit by spike in dollar demand and negative cues from local stocks, the rupee on Wednesday plunged 65 paise in its biggest single-day drop in over six months to end at 61.49 against the greenback.
Continued strength in US economy lifted the American dollar after data on Tuesday showed US services sector activity hit an 8-1/2 year high last month and June factory orders surged. This affected the rupee sentiment, say dealers. A global sell-off in equities hit Indian stocks dragging the rupee to over five-month lows, they said.
Dollar demand from importers on fears of rise in global oil prices amid worries that the Ukraine crisis could escalate, also impacted the rupee, they added.
At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced weak at 61.06 and immediately touched a high of 61.03.
As reports filtered in that Russia is building up troops on Ukraine border despite sanctions by US and Europe, emerging currencies and stocks were hit. Importers and some banks bought dollars buying on hopes of further rise in this safe haven unit while forex dealers rushed to cover their short dollar positions, leading to deep losses for the rupee.
The rupee continued its down-slide and touched a low of 61.53, before concluding at 61.49, a level not seen since March 5, 2014 when it had settled at 61.75. For the day, it logged a fall of 65 paise or 1.07 per cent, the biggest single-day drop since the 73 paise plunge on January 24, 2014.
The benchmark Sensex slumped 242.74 points, or 0.94 per cent. FIIs had bought shares worth Rs 52.85 crore on Tuesday.