Weakness in global stock markets and a strong US currency pulled down the rupee by a whopping 63 paise to end at over four-month low of 61.18, logging its worst weekly loss since January 24.
Importers and some banks bought dollars and short-sellers covered their positions on hopes of further hike in the dollar value after US Fed recently trimmed its monthly economic stimulus by $10 billion. The dollar too gained against most peers as the American economy grows stronger.
A steep fall in local indices after a global sell-off also weighed down on the rupee. The benchmark Sensex today slumped over 414 points, or 1.60 per cent, to a three-week low.
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Foreign Institutional Investors had pulled out Rs. 1,654.86 crore yesterday. This also hit the rupee sentiment.
At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced weak at 60.75 a dollar from last close of 60.55 and immediately touched a high of 60.69.
However, it later tumbled to a low of 61.19 before ending at 61.18, showing a fall of 63 paise or 1.04 per cent. This is its weakest closing since 61.34 on March 20. In absolute term, this 63-paise fall is the biggest since January 24 (73 paise).
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Yesterday, it has plunged by 49 paise or 0.82 per cent.
The strength in US dollar index and weakness in Asian currencies and global stock markets were seen taking a toll on the currency. The failure to reach an agreement on the WTO deal further hit investor sentiments, a forex broker said.
On the drop in markets, RBI Governor Raghuram Rajan in Delhi said: “We are not immune to what is happening world markets.”
For the week, the rupee slumped 108 paise — its worst drop since 112-paise plunge in the week ending January 24.
Pramit Brahmbhatt, CEO, Veracity Group said: “Rupee fell taking cues from dollar which traded strong. A global sell-off hammered the market which further depreciated the rupee...some intervention was suspected from RBI through State-run banks.”
The trading range for the spot Dollar/Rupee pair is expected to be within 60.70 to 61.70, he added.