Rupee falls 28 paise to 62.01; awaits Fed, RBI decision

After a brief respite, the rupee slipped below the 62 level against the dollar today, falling 28 paise ahead of the RBI's policy review and the two-day US Federal Reserve meeting.

The rupee also declined on renewed dollar demand from importers and banks amid bearish local equities. Its fall was restricted by foreign fund inflows and a weak dollar overseas.

At the interbank foreign exchange market, the rupee opened lower at 61.75 a dollar. It gradually moved to a low of 62.03 before settling at 62.01, a fall of 28 paise or 0.45 per cent. Yesterday, it rose 39 paise.

"The gains posted by the rupee yesterday on the back of dollar selling by the RBI were wiped out in the initial trade. The expectation of interest rate hike by the RBI and some hints of tapering from the Fed are putting pressure on the rupee," said Abhishek Goenka, CEO of India Forex Advisors.

The benchmark 30-share Sensex declined for the sixth straight session and closed 47.38 points lower amid increasing expectations of an interest rate hike by the RBI tomorrow as it seeks to combat inflation.

Overseas investors bought shares worth a net Rs 159.55 crore yesterday, according to provisional data with the stock exchanges.

"Rupee ended week against dollar due to renewed demand for the US currency from banks and importers," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "The dollar index, which measures the US currency's value against a basket of six major currencies, traded in a narrow range ahead of the Federal Open Market Committee meeting.