Rupee weakens by 8 paise to 54.69 vs US dollar

Weakness in local stocks and sustained demand of the US currency from importers pulled the rupee down while capital inflows worth Rs 1,029.50 crore from FIIs in stock markets helped cap the currency's losses to an extent, said dealers.

At Interbank Foreign Exchange (Forex) market, the rupee resumed lower at 54.77 a dollar from Tuesday's close of 54.61.

A sluggish dollar overseas was seen supporting attempts by the rupee to script a recovery. However, the domestic currency later moved erratically in a range of 54.68 and 54.88 amid hopes of interest rate cut dimming after RBI Governor's comments, treasury officials said.

The rupee finally settled at 54.69, a fall of eight paise or 0.15 per cent. Yesterday, it had declined by 12 paise.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: Rupee extended its weakness on weak global cues and fall in domestic equity markets. Bonds continue to trade lower on the RBI Governor's comment about inflation remaining high... If the same stance is adopted by RBI in its upcoming policy meet, then rupee shall fall to the 55.60 levels in no time," he added.

The Indian stock market benchmark Sensex today tumbled by 169.19 points, or 0.85 per cent after RBI Governor D Subbarao yesterday evening said inflation is "still high".

WPI inflation in December had fallen to a three-year low, fanning hopes of a rate cut soon.

The dollar index, a gauge of six major global rivals, was down by 0.18 per cent while New York crude oil was trading near USD 93.50 a barrel in Europe today. (MORE)