The Indian rupee on Tuesday weakened by 5 paise to end at 61.88 against the Greenback on sustained demand for the American currency from importers amid a broader sell-off in equities.
Widening current account deficit due to soaring gold imports mainly put pressure on Indian unit that fell for the second day, despite a weak dollar overseas.
At the Interbank Foreign Exchange (Forex), the domestic unit commenced lower at 61.89 compared to overnight closing level of 61.83. It hovered in a wide range owing to volatile domestic stocks between 61.9175 and 61.8475 before concluding at 61.88, showing a loss of 5 paise, or 0.08 per cent.
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“Robust capital inflows along with profit-taking in the U.S. currency after its recent rally some what cushioned the rupee sentiment,” a forex dealer said.
India’s current account deficit (CAD) widened to $10.1 billion or 2.1 per cent of gross domestic product in the second quarter of this fiscal, up from 1.2 per cent a year-ago primarily led by a steep rise in gold imports.
Deficit concerns were to some extent offset by foreign capital inflows against the backdrop of plunging global oil and commodity prices, traders said.
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Meanwhile, equities plummeted for the third straight day with Sensex and Nifty sliding over 1 per cent spooked by a rout in global financial markets and growth concerns.
Foreign portfolio investors bought shares worth a massive Rs. 4,984.60 crore on Monday as per provisional data.
Benchmark Brent crude slipped to a five-year low, sliding below $66 a barrel on growing worries over a deepening supply glut.
The dollar index, which measures the Greenback against a basket of six major currencies, was down by 0.36 per cent.