The rupee depreciated further by 13 paise to close at 53.94 against the dollar at the Interbank Foreign Exchange (Forex) market on Friday on the back of weakness in local equities despite key rate cut by the RBI.
Dollar demand from importers also weighed on the rupee, while sustained capital inflows and weak dollar overseas limited the fall to certain extent, a forex dealer said.
At Forex market, the domestic unit commenced lower at 53.95 a dollar from previous close of 53.81 and moved in a restricted range of 53.88 and 54.06 before settling at 53.94, showing a fall of 13 paise, or 0.24 per cent.
The Indian benchmark Sensex, after three-day of gaining string, dropped by 160.13 points, or 0.81 per cent, after hawkish stance by the RBI governor on the future rate cut.
The Reserve Bank of India (RBI) in its annual monetary policy 2013-14 meet on Friday cut short-term lending rates (repo) by 0.25 per cent, while kept cash reserve ratio (CRR) unchanged, which disappointed the industry and markets as the rate cut of 0.25 per cent was already factored in.
FIIs bought shares worth Rs 1,429.94 crore yesterday as per provisional data with stock exchanges.
Dollar index was down by 0.25 per cent against a basket of six major global rivals ahead of monthly US jobs figures that may provide insight into what’s next for the Federal Reserve’s monetary-stimulus efforts.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, “Today RBI announced the rate cut by 25 basis point, brought down the interest rate from 7.50 per cent to 7.25 per cent, CRR was kept unchanged at 4 pct. The decision was taken negatively by the Equity markets; it closed down by almost 1 per cent which helped dollar to trade strong against rupee and during the day it depreciated by nearly quarter per cent.”