After two days of gain, the rupee tumbled 53 paise to a fresh closing low of 61.30 against the dollar amid bearish local stocks and renewed dollar demand from importers.
The local currency was also dragged lower by indications that the US Federal Reserve would taper its bond-buying programme. Fresh capital outflows added to the negative sentiment on the rupee, a dealer said.
The rupee opened at 61.15 a dollar from the previous close of 60.77 at the Interbank Foreign Exchange Market. While it regained some ground to 60.94 on the back of a recovery in local equities, the currency again turned negative in line with a drop in stocks to a low of 61.45.
The rupee ended at 61.30, a fall of 53 paise, or 0.87 per cent. The previous closing low was 61.10 on Friday. In the past two days, the rupee had gained 33 paise or 0.54 per cent.
“It witnessed a slight recovery in anticipation of government measures to curb the fall in the currency,” said Abhishek Goenka, CEO of India Forex Advisors. “The Finance Ministry and the RBI were to meet on Wednesday to discuss what more measures can be taken to address the problem. Any positive announcements from them will help rupee to erase its losses.”
The benchmark S&P BSE Sensex declined over 68 points, or 0.36 per cent, after plunging 2.34 per cent on Tuesday. FIIs sold a net Rs 350.93 crore of shares on Wednesday, according to provisional data with the stock exchanges.
Most stock indices globally ended lower after a US Federal Reserve official on Tuesday indicated it could start tapering the bond-buying programme as early as next month.
“The trading range for the spot USD/INR pair is expected to be within 60.90 to 61.90,” said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).