Greece's possible Euro zone exit pulls rupee down

Indian currency falls to 63.57 against dollar; experts fear it might breach 64-a dollar mark

The rupee ended at 63.57 per dollar on Tuesday as foreign investors, jittery over Greece's possible exit from the Euro zone, opted for dollars, considered a safe haven.

Falling below the previous low of 63.42 a dollar, the rupee touched 63.62 a dollar during intra-day trades. It had opened at 63.67 on Tuesday. Experts feel the rupee may breach the 64-a dollar mark as well.

"There is a bias against the rupee, led by concerns in the Euro zone. The sell-off could continue, due to which the rupee could depreciate beyond 64 to around 64.30. However, there would be slow depreciation in the rupee against the dollar," said Anindya Banerjee, currency analyst, Kotak Securities.

The fall continued despite the Reserve Bank of India (RBI) selling dollars in the afternoon.

"The RBI sold dollar today (Tuesday) sometime in the afternoon through state-run banks. But later, state-run banks were buying dollars on behalf of oil marketing companies and corporates," said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

Last month, after the end of the two-day policy meet, the US Federal Reserve said it can be "patient" in its approach to raising the benchmark lending rate from a range of zero to 0.25 per cent, where it has been since December 2008.

But despite that, it is believed that with each improving US economic data, rate hikes are getting closer and 2015 will certainly see the start of it.

"Domestic share markets fell three per cent today (Tuesday) and hurt sentiments. The rupee also fell as worries about Greek debt, weak oil prices and a strengthening dollar weighed on investors' minds," said Suresh Nair, director, Admisi Forex.

The gain in the rupee against the dollar is limited.

"In the near term, the gains in rupee could get capped at 63.25 and the currency could weaken to 64.50," said Raghuvanshi, senior dealers, forex - treasury and correspondent banking, DCB Bank.