Rupee tumbles 39 paise against dollar on 'surgical strikes'

The rupee today lost a whopping 39 paise -- its biggest single-day fall in three months - against the US dollar to close at 66.85 after the Army carried out "surgical strikes" last night on terror launchpads across LoC.
Overall sentiment turned highly volatile on fears that heightening tensions between India and Pakistan could bitter sentiment for foreign investors who have been pumping funds into the world's fastest emerging economy.
Month-end dollar demand from oil companies along with aggressive hedging strategy adopted by importers in the wake of currency volatility mainly weighed on the rupee trade.
In parallel, the benchmark BSE Sensex tumbled over 465 points to end at 27,827.53.

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced higher at 66.44 from last close of 66.46 and firmed up further to 66.42 on sustained selling of the greenback by exporters and banks amidst higher opening in the domestic equity market.
However, the rupee suffered a big blow in noon trade and witnessed a sharp downturn to hit a low of 66.92 after reports of surgical strikes against Pakistan flashed alongside a massive fall in local equities.

It remained under immense pressure throughout the day witnessing high amount of volatility and wide swings before recovering some ground to end at 66.85, showing a steep fall of 39 paise, or 0.59 per cent.

The rupee had appreciated by a healthy 56 paise in the last five trading sessions after the Federal Reserve left interest rates unchanged in its September policy meet.
However, anticipating carnage on the forex market, intervention from state-run banks on behalf of RBI largely helped the currency to cut some early losses, according to currency dealers.
Any tension across the border is definitely going to hurt sentiment, they added.
Meanwhile, the greenback recovered against its major trading peers ahead of US GDP data release later in the day.
The dollar index was trading up by 0.20 pct at 95.47 as against a basket of six currencies in late afternoon trade.

RBI today fixed the reference rate for the dollar at 66.5521 and euro at 74.6848.
In cross-currency trades, the rupee drifted sharply against the pound sterling to end at 87.05 as compared to 86.52 and retreated against the euro to settle at 75.00 from 74.51 yesterday.
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The RBI fixed the reference rate for the dollar at 68.1241 and for the euro at 71.2101.

In cross-currency trades, the rupee declined to 83.49 against the pound sterling from 83.43 yesterday and also fell against the euro to settle at 71.21 from 71.07 per euro.
It also dropped against the Japanese Yen to 58.43 per 100 yens from 57.93 previously.
In forward market today, premium for dollar moved down further on sustained receivings from exporters.
The benchmark six-month premium payable in May eased to 122-123 paise from 123-125 paise yesterday and far forward November 2016 contract also fell further to 266.25-267.25 paise from to 269.5-271.5 paise.
Meanwhile, the benchmark Sensex rose by 155.47 points or 0.59 per cent to close at 26,366.15.