Rupee falls to 3-week low

The rupee on Thursday ended 0.14 per cent down at 66.93 a dollar, after China let the yuan depreciate against the US currency to protect its falling economy.

China adjusted the central parity rate of the yuan by 0.5 per cent to 6.5646 against the dollar, allowing the currency to rise or fall by two per cent of the mid-point on each trading day. The rupee opened at 66.87 a dollar, against its previous close of 66.83, and hit a low of 66.97 a dollar before Reserve Bank of India's (RBI) intervention infused some strength in the currency. However, the currency came under selling pressure and ended at 66.93 a dollar.

Currency dealers said the movement in the rupee was sentiment-driven and the local currency can test the 67.50-level in the coming days before strengthening back.

"Fundamental is in favour, but sentiment is negative and is aligned with other emerging markets currencies. Once the sentiment turns neutral, the focus will go back to fundamentals and then exporters will find value around the current level to sell their dollars," said Harihar Krishnamurthy, head of treasury at First Rand Bank.

The dollar index, which measures the US currency's strength against global majors, was trading at 98.698, down 0.49 per cent from its previous close.

Against the dollar, on Thursday, the Taiwanese dollar fell 0.303 per cent, the Thai baht 0.099 per cent, the Philippine peso 0.117 per cent, and the South Korean won 0.267 per cent. However, the Japanese yen rose 0.757 per cent and the Indonesian rupiyah 0.115 per cent against the dollar. The fall in global markets, fuelled by China, is a sign of global distress and the rupee wouldn't be immune to it, currency dealers said. But a fall in oil prices was still favouring India.

Even as foreign investors are bearish on emerging market equities and the Indian stock market has also seen some fall, they are bullish on Indian debt.

Foreign investors on Monday bid aggressively to reserve their rights to buy freshly opened up bond limits. Against Rs 7,396 crore on offer, the investors bid for Rs 14,285 crore, paying as high as 82 basis points to reserve their rights for investment.