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Rupee drops 6 paise to 63.66 on dollar buoyancy

Press Trust of India  |  Mumbai 

The overnight recovery proved to be short-lived as the once again turned shaky against the and settled lower by 6 paise to 63.66 on fresh bouts of demand for the American

Besides, the dollar's recovery against some currencies overseas alongside sustained withdrawal of funds by foreign portfolio investors (FPIs) largely weighed on trade.

Foreign institutional investors (FIIs) sold worth Rs 572.26 crore yesterday, as per the provisional data.

traders moved cautiously ahead of the IIP data for November and Consumer Price (CPI) for December, to be released tomorrow.

Though, the home managed to withstand early pressure after plunging to a low of 63.81 intra-day.

Overall sentiment remained buoyant on the hopes of more inflows from foreign investors, after the announced norms relaxation for some sectors.

The yesterday permitted foreign airlines to invest up to 49 per cent in debt-laden and eased norms for investment in single-brand retail, construction and power exchanges.

The domestic topped its fresh three-year high last Friday and strengthened by a healthy 50 paise for the first week of the new year.

On the international commodity front, global crude prices rebounded to the highest closing levels in more than three years fuelled by a surprise drop in US production and lower inventories.

Brent crude futures were at USD 69.56 a barrel in early Asian trading, the highest since May 2015.

Meanwhile, after a brief pause, equity benchmarks continued their record-breaking run led by gains in select frontline heavyweights on growing optimism surrounding corporate earnings despite weak global cues.

Most Asian stocks slipped following a softer Wall Street lead.

The BSE Sensex rose over 70 points to end at a new closing peak of 34,503.49, while Nifty rose 19 points to a record of 10,651.20.

At the Foreign Exchange (forex) market, the Indian unit resumed modestly weak at 63.65 against Wednesday's close of 63.60.

It later touched a low of 63.81 on heavy pressure.

However, the domestic unit staged a good recovery towards the fag-end session, as state-run banks stepped up greenback sales likely on behalf of exporters, limiting earlier losses despite rallying crude prices.

The finally settled the day at 63.66, showing a small loss of 6 paise, or 0.09. It had bounced back yesterday after a two-day fall.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 92.02 in early trade.

Globally, the dollar held onto modest gains against other major currencies, as concerns surrounding that may halt its US bond purchases continued to ease.

The greenback fell sharply on Wednesday on reports that was considering reducing its purchases of bonds.

In cross-currency trades, the surged against the pound sterling to finish at 85.81 per pound from 86.17 and bounced back against the Japanese yen to end at 57.01 per 100 yens from 57.09 yesterday.

The home unit also rebounded against the euro to close at 76.04 compared to 76.28 earlier.

Elsewhere, the Japanese yen continued to strengthen significantly across the board and investors digested about the potential tapering. The BoJ on Tuesday announced that it would reduce its bond purchases on the longer term 20 and 40 year bonds.

The common currency euro fell back against the ahead of the ECB December meeting minutes in the midst of lagging Eurozone industrial production data for the month of November.

The Pound sterling, however, traded little changed, largely ignoring the reports of the Britain losing half a million jobs and nearly 50 billion pounds in investment by 2030 if the UK fails to reach the orderly deal with the on conditions of Brexit.

In forward market today, premium for dollar dropped owing to good receiving from exporters.

The benchmark six-month premium payable in June moved down to 129-131 paise from 134-136 paise and the far-forward December 2018 contract also declined to 267-269 paise from 272-274 paise previously.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 18:55 IST