Rupee at 1-week low vs US dollar

The rupeeon Tuesday lost a hefty 31 paise to close at over seven-day low of 55.65 against the US dollar on sustained demand of the American currency from importers and worries over higher trade deficit in July.

A firm local stock market on lower-than-expected inflation numbers amid sustained FII inflows restricted the rupee's fall to some extent, forex traders said.

At the Interbank Foreign Exchange (Forex) market, the local currency commenced lower at 55.49 a dollar from previous close of 55.34. It remained in the negative terrain throughout the day as higher trade deficit for the month of July put the currency under pressure.

With dollar demand rising from importers, the rupee dropped further to a low of 55.79 before recovering some ground on around Rs 258 crore worth of FII stock inflows to settle at 55.65, a drop of 31 paise over yesterday's close value. In last three days, the rupee has fallen over 40 paise.

India's exports in July fell 14.8 per cent to $22.4 billion, while imports fell 7.61 per cent to $37.9 billion, leaving a trade deficit of $15.5 billion. This is wider than $10.3 billion recorded in June. Experts said in the long-term, larger trade deficits contribute to a weaker rupee.