Extending losses for the fourth straight session, the rupee on Tuesday plunged by 32 paise to close at nearly 2-month low of 64.19 per dollar on persistent demand for the American currency from banks and importers on the back of higher greenback overseas.
A massive rout in currency and financial markets worldwide spooked by Chinese central bank’s policy move along side heightened concerns about capital outflows in the face of imminent US interest rate hike predominantly weighed on the local currency, a forex dealer said.
The dollar soared during the Asian session following the shocking action by the Chinese central bank even as Greek reached a deal on a third bail-out package with its creditors.
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The rupee resumed substantially lower at 64.16 per dollar from overnight closing level of 63.87 at the Interbank Foreign Exchange (Forex) Market and dropped further to 64.28 before ending nearly 2-month low at 64.19, showing a loss of 32 paise or 0.50 per cent.
The rupee had last ended at 64.26 per dollar on June 16, 2015.
The rupee has dropped by 45 paise or 0.71 per cent in five trading days.
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The domestic currency moved in a range of 64.03 and 64.28 per dollar during the day.
The People’s Bank of China allowed the yuan to depreciate almost 2 per cent against the US dollar to levels last seen three years ago.
The ripple effect of renminbi’s sharp depreciation pressure was felt in the currency markets across the region and lost ground to the strengthening US dollar as traders weighed the implications of the surprise move by the People’s Bank of China (PBOC) amid weakening exports and slowing economic growth.