Rupee tumbles by 20 paise to 67.94 against a strong dollar

Continuing its downfall for the fourth-straight session, the rupee today fell by 20 paise to end at near five-month low of 67.94 against the US currency in a highly volatile trade amid unabated dollar outflows.

Sustained greenback buying by banks and importers amid a continued pullout of capital by foreign funds predominantly weighed on the domestic currency, dealers said.

The dollar maintained its bullish momentum in Asian and early European trade after a robust US retail sales data reiterated speculation that the Federal Reserve will raise rates soon, forex traders said.

The rupee resumed modestly higher at 67.68 compared to the previous close of 67.74 at the Interbank Foreign Exchange market and strengthened further to 67.61 due to an adequate supply of greenback and also firm local equities.

However, in late afternoon trade, the rupee slid in line with retreating stock markets and touched an intra-day low of 67.97 per dollar.

The local currency finally settled at 67.94 — its lowest since June 24 this year- showing a loss of 20 paise, or 0.30% in the day. The rupee had settled at 67.96 against the dollar on June 24.

The rupee has tumbled by over 2% or 151 paise in since November 10 on sustained capital outflows.

Domestic equities ended almost steady despite a spectacular start on the back of late selling pressure in key frontline heavyweights amid heightened concerns about global growth.

Foreign portfolio investors continued their intense selling and offloaded worth Rs 1,957.04 crore on Wednesday, according to provisional data from exchanges.

Meanwhile, falling for the third straight month in October, retail inflation slipped to 14-month low of 4.20%, strengthening the case for the Reserve Bank of India (RBI) rate cut in its monetary policy review next month.

The dollar Index was quoted sharply higher by 0.35% at 100.55 in the afternoon trade.

Meanwhile, the RBI on Wednesday fixed the reference rate for the dollar at 67.7791 and euro at 72.8422.

In cross-currency trades, the rupee fell back against the pound sterling and closed at 84.37 from 84.09, while firmed up further against the euro to end at 72.70 as compared to 72.96 on Tuesday.

The home unit gained further ground against the Japanese yen to finish at 61.97 from 62.57 per 100 yens earlier.

In the forward market, a premium for dollar jumped due to fresh paying pressure from corporates.

The benchmark six-month premium for April rose to 138-140 paise from 134-136 paise and the far-forward October 2017 contract also moved higher to 299-301 paise from 295-297 paise from 318-320 paise.

Crude prices rose sharply amid reports that the Opec (Organisation of the Petroleum Exporting Countries members) are scrambling to finalise the implementation details of an output cut deal struck in September.