Breaching the 55-levels, the rupee weakened to more than one-week low to end at 55.06 against the dollar due to a stronger dollar and concerns on slowing growth and widening current account deficit.

The domestic unit opened lower at 54.82 from a close of 54.50 on Thursday on the back of dollar demand from importers for oil and defence related deals and weak global equity markets. The current account deficit data that was out early this week widened to a record high of 5.4 per cent in the July-September quarter.

The dollar strengthened to a three-week high against the euro and other currencies after the US Federal Reserve officials expressed concern over continuing to expand stimulative bond-buying. The American currency hit its highest level against the yen in almost two and a half years.

In addition, the US jobs data could help the dollar gains. A strong jobs data may boost chances that the Fed could halt its asset buying sooner than expected. The Fed has embarked on a $1 trillion stimulus program to lower the US unemployment rate.

However, investors’ hopes of a rate cut by the Reserve Bank of India in its third quarter monetary policy review on January 29 could boost the rupee.

Call rates, G-Secs

The inter-bank call money market ended higher at 8.05 per cent from its previous close of 7.98 per cent on Thursday. The call rates had opened higher at 8.15 per cent.

The 8.15 per cent government security, which matures in 2022, ended higher at Rs 101.42 (yield: 7.93 per cent) from Thursday’s close of Rs 101.19 (yield: 7.96 per cent).

(This article was published on January 4, 2013)
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