Rupee weakens 36 paise on fresh dollar demand

The rupee today weakened 36 paise to close at 57.87 against the US currency on fresh dollar demand from importers and some banks, even as the Reserve Bank of India (RBI) kept its policy rates on hold and stock markets posted gains.

At the Interbank Foreign Exchange market, the local unit resumed weak at 57.70 a dollar and moved in a range of 57.55 and 57.90 during the day. It settled at 57.87, a fall of 36 paise or 0.63 per cent. Last Friday, it had risen by 47 paise or 0.81 per cent.

"The rupee started the week on a weak note by depreciating more than a half per cent during the day against the dollar as the dollar index which measures the greenback against a basket of six other currencies traded strongly against the other major currencies," Pramit Brahmbhatt, chief executive officer, Alpari Financial Services (India) said. "The trading range for the spot dollar/rupee pair is expected to be within 57.40 to 58.10," he added. Renewed demand from banks and importers in view of a firm dollar abroad mainly affected the rupee value, a forex dealer said. Sustained capital outflows also weighed on the rupee, the dealer said. Foreign institutional investors pulled out Rs 305.68 crore last Friday according to provisional data with stock exchanges. "We saw the rupee appreciating today after RBI kept the rates on hold. The trade deficit widened to $20.14 billion for May but the rupee did not react to this data," India Forex Advisors CEO Abhishek Goenka said.

Call rates end higher
The call money rate recovered on fresh demand from borrowing banks.

It finished higher at 7.25 per cent from 6.75 per cent previously.