The rupee today tumbled by 49 paise to end at near five-month low of 67.74 against the US dollar following frantic demand for the American currency amid heavy capital outflows.
Heavy offloading in portfolios by foreign investors and global traders in the face of a resurgent dollar mainly led to fall in the rupee, forex dealers said.
A combination of domestic factors like growth constraints in the midst of lack of revival in investment climate as well as demonetisation of big notes too aided to the rupee woes, they added.
Foreign investors today withdrew over Rs 2,350 crore on net basis from stock markets, provisional bourses’ data showed. On Friday, foreign investors had withdrawn over Rs 2,500 crore from debt and equity markets.
The rupee resumed with a deep cut at 67.62 from last closing value of 67.25 at the Interbank Foreign Exchange (Forex) market and continued its descending trend due to sustained demand for the American currency from importers amid weaker equities.
After hiting a fresh low of 67.85 in late afternoon deals, the currency recovered some lost ground to end at 67.74, still showing a steep fall of 49 paise, or 0.73 per cent, against the US dollar.
On Friday, the rupee had lost 62 paise. Forex market was closed yesterday on account of ‘Guru Nanak Jayanti’
The relentless selloffs in domestic equities remained unabated with the key benchmark indices tumbling to multi- month lows on panic unwinding amid earnings woes.
The BSE Sensex tanked over 514 points to end at 26,304.63, while broader Nifty tumbled 187.85 pts to 8,108.45.
Meanwhile, RBI today fixed the reference rate for the dollar at 67.7173 and euro at 72.7758.
In global markets, the dollar index was quoted lower by 0.14 per cent at 99.89 against a basket of six currencies in afternoon trade.
The US Dollar has taken center stage in global financial markets after expectations that US President-elect Donald Trump may increase fiscal spending that could stoke inflation and prompt the Federal Reserve to accelerate the pace of rate hikes.
In cross-currency trades, the rupee staged a smart rebound against the pound sterling and finished at 84.09 from 84.93 and recovered against the euro to close at 72.96 as compared to 73.18 previously.
It also regained against the Japanese yen to settle at 62.57 from 63.29 per 100 yens earlier.
In the forward market, premium for dollar fell sharply due to sustained receiving by exporters.
The benchmark six-month premium for April tumbled to 134-136 paise from 150-152 paise and the far-forward October 2017 contract also dropped to 295-297 paise from 318-320 paise last weekend.
