Rupee tumbles on 1st day of new year, down 32 paise

Demand for the greenback from banks and importers and little support from local share market led to rupee snapping a two-session uptrend

The Indian rupee was off to a bad start in the new year as it suffered the worst single-day drop in over two weeks today by falling 32 paise to end at 63.35 against the US dollar.

Demand for the greenback from banks and importers and little support from local share market, where benchmark indices ended almost flat, led to rupee snapping a two-session uptrend.

The dollar gained strength overseas against most peers on speculation that US Federal Reserve will raise rates by the middle of this year, said forex traders.

Yesterday, the rupee had gained 35 paise against the greenback but lost ground on an annual basis for the fourth year in a row.

The rupee today resumed lower at 63.17, which was also the day's high, as against yesterday's closing level of 63.03 at the Interbank Foreign Exchange (Forex) market.

It then dropped further to 63.46 per dollar before ending at 63.35 per dollar, showing a loss of 32 paise of 0.51%. This is its steepest single-day drop since December 16, 2014 when it fell by 59 paise.

In the previous two sessions, the rupee had gained 64 paise, or 1.01%.

Indicating the strength of dollar in overseas markets, the closely-tracked dollar index was up by 0.04% against a basket of six major global rivals.

In New York, the dollar ended 2014 with a gain of nearly 13% against the late yesterday. Currency markets were closed today on account of New Year holiday.

Pramit Brahmbhatt, Veracity Group, CEO said: "Rupee depreciated over half% during the day taking cues from the dollar demand from banks and oil importers. Also, local stock indices traded range bound and closed flat."

The trading range for the spot rupee is expected to be within 63.00 to 63.70, he added.

The Indian benchmark Sensex today ended about eight points higher at 27,507.54.