Rupee dives to 3-week low of 64.59 against dollar

Caught in a downward spiral for the third straight session, the rupee today depreciated by 7 paise to end at a fresh three-week low of 64.59 on steady dollar demand amid deepening global oil rout. This is the lowest closing for the home currency since May 30, when it had closed at 64.66.

Forex market traded with a broadly hesitant tone on growing uncertainty about global economic growth as sell-off in crude prices remained unabated, triggering volatility in financial markets.

Demand for the greenback from banks and importers and little support from local share market too weighed on trade. The rupee opened a tad weak at 64.53 per dollar from overnight closing of 64.52 at the Interbank Foreign Exchange (Forex) market.

But soon, it recovered to hit a fresh intra-day high of 64.45 briefly in early morning before succumbing to dollar pressure once again.

After touching a session low of 64.60 towards the fag-end trade, the local unit ended at 64.59, showing a fall of 7 paise, or 0.11 per cent.

The Indian unit has lost 16 paise in last three days.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.4950 and for the euro at 72.0732. Meanwhile, local equities relinquished early strong gains and ended almost flat in another cautious session as traders booked profit after the benchmark Sensex hit a fresh record high during the day amid bearish global sentiment.

World stock markets too reacted to tumbling crude oil prices. Foreign funds continued to offload Indian equities worth Rs 152.82 crore yesterday, as per the provisional data.

On the global front, the US dollar traded marginally lower against other major currencies on Thursday despite upbeat US housing sector data as traders turned their attention to the upcoming report on weekly jobless claims.

The dollar index, which tracks the US currency against a basket of six major rivals, was down at 97.19.

In cross-currency trades, the rupee bounced back against the pound sterling to close at 81.87 from 82.00 per pound, but dropped further against the euro to settle at 72.15 from 71.94 earlier.

The home currency also lost further ground against the Japanese yen to finish at 58.00 per 100 yens from 57.94.

In forward market today, premium for dollar continued to show subdued trend owing to sustained receivings from exporters.

The benchmark six-month premium payable in November declined to 126-128 paise from 130.50-132.50 paise and the far forward May 2018 contract also slipped to 269-271 paise from 273-275 paise on Wednesday.

On the International commodity front, crude prices slid back towards multi-month lows on Thursday after a brief recovery in early session even as traders warily eyed global supply glut that has persisted despite OPEC-led efforts to balance the market.

Brent crude futures were down 15 cents at USD 44.67 a barrel at early Asian trade. Oil prices have tumbled more than 20 per cent this year so far.