Rupee posts biggest single-day fall in over two weeks

The rupee fell against the dollar today, posting its biggest single-day decline in more than two weeks, after shares fell over 1% while dollar demand from importers, particularly Oil Marketing Companies (OMCs) kept the rupee under pressure.

Traders said investors also decided to cover their short dollar positions after the rupee failed to gain past 62 in opening deals despite much better-than-expected consumer inflation data.

Data late on Wednesday showed Consumer Price Index (CPI) inflation slowed to a two-year low in January, but a third straight fall in industrial output in December offered little hope for an economic rebound.

The rupee ended at Rs 62.44 on Thursday compared with previous close of Rs 62.11 per dollar. The rupee had opened at Rs 62.01 and during intra-day trades it touched a high of Rs 62.01 and a low of Rs 62.47 per dollar.

"There was good demand for dollars from state-run banks, particularly for oil, today. Even foreign funds seem to have sold dollars," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank. The rupee fell 0.5% on the day, its biggest single-day fall since its 0.7% drop on January 27.

The rupee is seen weakening further tomorrow as dollar demand from OMCs expected to continue. “The rupee may trade in the range of Rs 62.20 to Rs 62.60 tomorrow. The bias is seen towards weakening,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.