Rupee falls most in six weeks to 61.88 against dollar

The rupee fell against the dollar, the most in six weeks on Thursday  as importers stepped up purchases to pay month-end bills.

The rupee dropped 0.8 per cent to close at 61.88 which was the biggest drop since December 16 .

Asian currencies weakened on Thursday after the US Federal Reserve boosted its assessment of the economy, spurring gains in the greenback.

“The main reason behind the rupee’s drop today (Thursday) is the dollar demand from oil companies to meet their month-end payments,” said Navin Raghuvanshi, a currency trader at DCB Bank.

The dollar’s strength globally also weighed on the rupee, he added.

The rupee had opened at 61.44 per dollar compared with previous close of 61.41. But despite Thursday’s weakening the rupee has appreciated by 1.84 per cent since the start of 2015.

The currency is not seen weakening significantly from here due to foreign flows in domestic markets.

“The Coal India divestment is happening on Friday due to which there will be flows in the market. The rupee is not seen weakening beyond 62 on Friday,” said the head of treasury of a state-run bank.

According to currency dealers, the Reserve Bank of India (RBI) was active in the market on Thursday, though its the presence was less. In the recent past, RBI has been mopping up dollar flows through state-run banks to bolster its foreign exchange reserves.

Latest RBI data show that foreign exchange reserves rose $ 2.67 billion for the week ended January 16 to an all-time high of $322.14 billion.