Indian rupee falls from 1-week high, at 62.51 against US dollar

The Indian rupee dropped 44 paise to end at 62.51 against the US dollar on Friday, ahead of the current account deficit (CAD) data release on Monday.

In the previous two days, the currency had risen by 68 paise to a one-week high.

The rupee had opened higher at 61.90 a dollar from the previous close of 62.07 and logged a high of 61.76 as local stocks made initial gains. It then dropped, in line with the stocks, to a low of 62.52 before ending at 62.51.

Forex dealers said the decline was limited by a sluggish dollar overseas and sustained capital inflows.

"It started weakening due to dollar buying by banks and corporates. Month-end buying of dollars and short covering was seen putting pressure on the rupee," said Abhishek Goenka, CEO of India Forex Advisors.

The 30-share BSE Sensex declined 166.58 points or 0.84 per cent. Foreign institutional investors (FIIs) bought a net Rs 172.15 crore of shares on Thursday.

The dollar index, a gauge of six major global rivals, was down by 0.20 per cent.

"The trading range for the USD-INR pair for the week is expected to be within 61.50 to 62.80," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India).

Meanwhile, Reserve Bank of India Governor Raghuram Rajan said in Frankfurt that there is still some inflation in India, even after stripping out the effects of food and energy.

Asked about the central bank's policy stance, Rajan said, "At this point we are neutral, we will see how things develop."

Finance Minister P Chidambaram on Friday said the right level for the rupee is 59-60 to a dollar, according to the real effective exchange rate, and it shouldn't overshoot that level.

With inputs from PTI