Rupee breaks 4-day winning run, drops 48 paise to end at 70.18 per US dollar

Snapping its four-day rising streak, the rupee Friday fell by 48 paise to close at 70.18 against the US currency due to month-end dollar demand and sharp losses in domestic equities.

Increased dollar demand from importers mainly oil companies weighed on the rupee sentiment, analysts said.

The rupee opened lower at 69.93 against the dollar and dropped further to quote at 70.37 in day trade. The local unit however pared some losses and finally settled at 70.18, down by 48 paise over its previous close.

A weak dollar and fall in crude oil prices helped the rupee trim its day's losses. The dollar index dropped by 1 per cent to 96.55 due to concerns over weak economic growth and signs of US government shutdown.

Despite losses on Friday, the rupee gained 172 paise or 2.4 per cent on weekly basis amid a slide in crude oil prices which touched USD 53.26 per barrel.

"Rupee gave up some gains due to volatility in bond yield. However, fall in oil prices is expected to provide strength to rupee in the near term," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

The benchmark 10 year bond yield fell 16 basis points to 7.28 per cent this week, marking fifth weekly loss, V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said.

According to B Prasanna - Head, Global Markets Group, ICICI Bank, the rupee is expected to strengthen towards 69 level by March 2019.

"Over FY2020 we expect it to trade around 69-72 against the dollar. capital flows would have to be watched especially on the Foreign Portfolio Investor as policy uncertainties and related volatility will continue even in 2019," Prasanna added.

Benchmark equity indices witnessed heavy sell-off Friday. The BSE Sensex plunged 689.60 points, or 1.89 per cent, to 35,742.07, while the NSE Nifty slipped 197.70 points, or 1.81 per cent, to 10,754.

Brent crude, the international benchmark, was trading at USD 53.34 per barrel Friday, lower by 1.86 per cent.

Foreign funds invested Rs 134 crore on a net basis in the capital markets.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.0368 and for rupee/euro at 80.2127. The reference rate for rupee/British pound was fixed at 88.7016 and for rupee/100 Japanese yen at 62.87.