Rupee drops 6 paise to 63.66 on dollar buoyancy


A News by PTI
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Mumbai, Jan 11 (PTI) The overnight recovery proved to be short-lived as the rupee once again turned shaky against the US dollar and settled lower by 6 paise to 63.66 on fresh bouts of demand for the American currency.

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 shares worth Rs 572.26 crore yesterday, as per the provisional data.

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

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

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

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

The domestic currency 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 Interbank 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 dollar 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 rupee 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 news that China may halt its US bond purchases continued to ease.

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