Rupee tumbles by 24 paise, hits one-week low against US dollar

After a fresh 2-year high, rupee surrendered all its gains in recent spell of downtrend

In line with domestic equities, the rupee on Thursday tumbled by 24 paise to hit a fresh one-week low of 64.08 against the US dollar on heavy demand for the American currency from corporates and importers.

After hitting a fresh 2-year high against a broadly weak American currency last week, the domestic currency has surrendered all its gains in the recent spell of the downtrend.

Consistent unwinding by foreign investors from equities and debt markets against the backdrop of stronger dollar overseas sentiment predominantly pressurised the rupee.

Besides, extremely bearish local markets further dampened the trading mood.

The domestic unit today extended losses for the second trading session and cracked the psychological 64-mark.

At the interbank foreign exchange (forex) market, the rupee opened lower at 63.95 against Wednesday's close of 63.84 following sustained dollar demand.

It lost further ground as the mid-week trading progressed and tumbled to a low of 64.09 before ending at 64.08, revealing a steep loss of 24 paise, or 0.38 per cent.

The RBI, meanwhile, fixed the reference rate for the dollar at 63.9437 and for the euro at 75.0635.

The domestic currency had touched a new 2-year high of 63.58 last Friday.

Globally, financial and currency markets remained cautious in view of simmering tensions between the US and North Korea.

Rupee bulls are giving up and pointing to break further lower in next few days as markets are shifting into a 'risk off' mindset against the backdrop of geopolitical tensions, a forex dealer said.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 841.44 crore yesterday, as per provisional data.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down 93.47.

In cross-currency trades, the rupee dropped further against the pound sterling to settle at 83.30 from 82.93 per pound and remained weak against the Japanese yen to finish at 58.36 per 100 yens from 58.17 earlier.

It also fell back against the euro to conclude at 75.04 from 74.93 yesterday.

In worldwide trade, the dollar traded modestly positive against the other major currencies, while the euro slipped towards a two-week low against the dollar.

In forward market today, premium for dollar remained lacklustre due to lack of market-moving factors.

The benchmark six-month premium payable in January eased to 133-135 paise from 134-135.50 paise and the far-forward July 2018 contract also edged lower to 268-270 paise from 266.50-268.50 paise.

On the international commodity front, crude prices gained further ground in early Asian trading on Thursday after official data showed US crude inventories fell more than expected.

Brent crude, the global benchmark, was up at $52.78, while US West Texas Intermediate (WTI) crude rose 8 cents at $49.64, after rising 0.8 per cent in the previous session.