Forex Update: Rupee ends 48 paise down at 1-month low of 61.13, biggest fall in 5-week

The rupee reacted sharply downwards by 48 paise - biggest fall in more-than five-week - to close below 61-mark after more-than one-month at 61.13 against the American currency following fresh dollar demand from importers amid sluggish local equities.

Strong surge in dollar overseas also kept the rupee under pressure while sustained capital inflows could not have desirable impact on the rupee, a forex dealer said.

Against a gauge of six major global rivals, the dollar index was up by 0.23 percent ahead of the two-day policy setting meeting of the US Federal Reserve starting from Tuesday .

Forex dealers expected early hike in interest rates by Fed after improving economy, which might induce foreign funds to withdraw money from emerging markets, including India.

At the Interbank Foreign Exchange (Forex) market, the local unit resumed lower at 60.92 a dollar from last weekend's close or 60.65 and immediately touched a high of 60.90.

Later, it met with strong resistance and dipped to a low of 61.18 before settling at 61.13, showing a steep fall of 48 paise or 0.79 pct. Previously, it had tumbled by 65 paise on August 6, 2014 while last time, it had closed at 61.21 on August 13, 2014.

The benchmark S&P BSE Sensex on Monday plunged by 244.48 points or 0.90 pct on weak global cues while FPIs/FIIs picked up shares worth $ 40.83 mln last Friday, as per Sebi data.

Meanwhile, the inflation measured on Wholesale Price Index (WPI) dipped to 3.74 pct in August to a nearly five-year low from 5.19 pct in July and 6.99 pct in August 2013.

Mr. Pramit Brahmbhatt, Veracity Group CEO said,"Today Rupee lost over 0.75 pct taking cues from the strong dollar which is already elevated near 14 month high. The local equities closed in red even though the WPI numbers to a five year low of 3.74 pct in August. However, increased demand for the US currency from importers which dented the rupee further towards end. The trading range for the Spot rupee is expected to be within 60.80 to 61.60."

In forwards market on Monday, premium ended narrowly mixed.

The benchmark six-month premium payable in February softened to 231-233 paise from last weekend's close of 232.5-234 paise while far-forward contracts maturing in August, 2015 edged up to 484-485 paise from 483-485.5 paise.

The Reserve Bank of India fixed the reference rate for dollar at 60.9945 and for the euro at 79.0306.

The rupee fell back sharply against the pound to 99.29 from 98.34 previously and also dropped to 79.00 per euro from 78.44. It dipped to 57.00 per 100 Japanese yen from 56.60.