Rupee hits 2-month low

Worst week for rupee since August

It was the worst week for the rupee against the dollar since August, when it had touched an all-time low of 68.85 to a dollar. This was due to concern on weakness in the economy and the prospect of further US Fed  tapering.

The rupee closed at Rs 62.69 compared with Thursday’s  close at Rs 61.93 to a dollar. During intra-day trade, it touched a low of 62.73, a level near 62.87 on November 22. The rupee had opened at 62.13.

According to currency dealers, the fall was due to month-end dollar demand from importers, as well as bearish stock markets.

The rupee fell 1.8 per cent this past week to 62.6850 to a dollar — the biggest five-day drop since August 30 — according to data compiled by Bloomberg.

The US Fed, which will review policy on January 28-29, might reduce stimulus in $10 billion increments at each meeting before concluding the programme this year, according to a January 10 Bloomberg News survey. Existing home sales in the US capped the best year since 2006 in December and jobless claims were near a six-week low, according to the most recent data, bolstering the case for the Fed to scale back its debt buying.

According to currency dealers, the weakness in rupee could extend to even next week, amid month-end dollar demand from importers and negative sentiments prevailing in the market. Currency dealers see the rupee hitting even Rs 63 against the dollar next week.