Rupee falls most in two weeks on month-end $ demand

The rupee fell the most in more than two weeks on speculation that importers are stepping up purchases of the greenback to pay month-end bills. It slumped to the 64-level against the US currency before ending at 63.98, falling by another 41 paise on persistent dollar demand from banks and importers.

The rupee resumed lower at 63.60 to a dollar against Monday's closing level of 63.57 at the interbank foreign exchange market and dropped further to 64.0050 before ending at 63.98, showing a loss of 41 paise or 0.64 per cent.

It was traded at 64.04 a dollar during intra-day trade on May 14. It had ended lower by 0.05 paise or 0.08 per cent on Monday. The domestic currency moved in a range of 63.60-64.050 per dollar during the day.

"The rupee's weakness is partly due to dollar demand from importers to make month-end payments," said Ankur Jhaveri, co-head of currency and rates at Edelweiss Financial Services Ltd in Mumbai.

Expectations the US is moving closer to raising interest rates are also weighing on the rupee, he said. Increasing borrowing costs in 2015 will be "appropriate," provided the economy meets forecasts, Federal Reserve Chair Janet Yellen said in a May 22 speech in Providence, Rhode Island. The Bloomberg Dollar Spot Index rose 0.5 per cent at 5:27 pm in Mumbai, with the currency reaching its strongest level in more than seven years against the yen.