As oil spurts, rupee tumbles to 3-week low vs dollar

RSTV Bureau
Photo: RSTV

Photo: RSTV

The rupee on Friday tumbled by 24 paise to close at three-week low of 67.05 a dollar on sustained demand for the US currency from banks and importers amid rise in crude oil prices.

Weak equity markets too hit rupee sentiment, a dealer said.

Falling for the second day, the rupee opened sharply lower at 66.95 a dollar from yesterday’s close of 66.81 per dollar at the Interbank Foreign Exchange (Forex) market. It dropped further to 67.0650 before closing at three-week low of 67.05 a dollar, showing a loss of 24 paise or 0.36 per cent.

The rupee had last closed at 67.14 a dollar on July 27, 2016.

Globally, markets turned cautious after a Federal Reserve policy maker said the US economy is strong enough to warrant an increase in interest rates soon.

Brent crude held firmly above USD 50 a barrel in Asian trade today as a bullish momentum continued, fuelled by hopes of an output freeze by key producers and data showing robustUS demand.

Crude oil imports form a major chunk of the country’s import basket and high oil prices raise concerns over capital outflows.

Meanwhile, the dollar index was trading up by 0.29 per cent against a basket of six currencies in late afternoon trade.

The Reserve Bank fixed the reference rate for the dollar at 66.9296 and for euro at 75.8714.      In cross-currency trades, the rupee dropped further against the pound sterling to 87.97 from 87.86 yesterday and also moved down further against the euro to 75.91 from 75.72.

The domestic currency also fell against the Japanese yen to 66.92 per 100 yens from 66.63.

In the forward market, premium for dollar continued to decline due to persistent receivings from exporters.

The benchmark six-month premium for January 2017 fell to 177-179 paise from 179-181 paise yesterday and for forward July 2017 contract also moved down to 376-378 paise from 379-381 paise.

Meanwhile, the benchmark BSE Sensex fell by 46.44 points or 0.17 per cent to 28,077.00.