Rupee update: Rupee logs third day of loss on dollar demand

Sustained dollar demand from importers amid weakness in local equities led the rupee to extend its losses for the third straight day and closed down by a mere two paise at 60.96 against the American unit, in an otherwise dull trade on Wednesday.

Heavy selling by foreign funds on Tuesday in local stocks and better dollar overseas also kept the rupee under pressure.

At the Interbank Foreign Exchange (Forex) market, the local currency commenced lower at 61.03 a dollar from previous close of 60.94 and moved in a limited range of 60.9250 and 61.05 before settling at 60.96, a net fall of two paise or 0.03 pct. In straight three days, it has declined by 15 paise or 0.25 per cent.

Continued month-end dollar demand from importers, mainly oil refiners weighed on the rupee.

The benchmark S&P BSE Sensex on Wednesday washed out major afternoon session losses, but still closed down by 31 points or 0.12 pct while FPIs/FIIs pulled out $156.79 mn on Tuesday, as per Sebi data.

The dollar index was up by a minor one per cent and remained near four-year peak against its major rivals, underpinned by safe-haven buying as US and Arab warplanes struck targets in Syria.

Mr. Pramit Brahmbhatt, Veracity Group CEO said,"Today Rupee traded in a thin range and ended almost flat. It is expected to depreciate in coming days due to month end dollar buying from oil marketing companies. In morning session also we have seen the pressure on rupee however exporter's dollar selling capped the dollar gain towards end. The trading range for the Spot rupee is expected to be within 60.70 to 61.40."

In forward market, premium softened further on continued receipts by exporters.

The benchmark six-month premium payable in February eased to 215.5-216.5 paise from 216.5-218 paise previously.

Far-forward contracts maturing in August, 2015 also slipped to 471.5-472.5 paise from 472.5-474.5 paise.

The Reserve Bank of India fixed the reference rate for dollar at 61.0293 and for the euro at 78.3738.

The rupee held stable against the pound to end at its overnight level of 99.89 while recovered to 78.21 per euro from 78.56. It also rebounded to 56.04 per 100 Japanese yen from 56.17 on Tuesday.