The rupee fell six paise to end at 61.91 against the dollar on Monday on month-end demand for the US currency from importers amid a sluggish equity market.
Stocks declined amid profit booking and caution after the Reserve Bank of India said any political instability after next year’s general election would hurt the economy further.
The RBI also said the country is ready for the US Federal Reserve’s tapering and pegged the current account deficit at below 3 per cent for this financial year, according to the central bank’s eighth Financial Stability Report.
The rupee opened lower at 62 a dollar against the previous close of 61.85 at the interbank foreign exchange market and hovered in a range of 61.8850 to 62.16 per dollar before ending at 61.91, a drop of six paise or 0.10 per cent.
“The rupee was seen trading in a thin range today...It was seen opening on a weaker note amid stable Dollar Index. However, the volume was thin. Weakness in the local equity markets also pressurised the rupee. Majority of the Asian currencies were seen trading on a weaker note,” said Abhishek Goenka, CEO of India Forex Advisors.
Month-end dollar demand from importers, mainly oil companies, affected the rupee, a forex dealer said. “Dollar demand from oil importers weakened the rupee but the fall was capped as the dollar index traded weak in the global market and helped the rupee to end near the weekend’s close,” said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).
The 30-share benchmark Sensex opened strong today only to end 50.57 points lower at 21,143.01.