The rupee fell to a two-month low on Tuesday, plunging by 47 paise against the US dollar to 63.71 as importers fanned demand even as fears grew of an impending wind-down of an easy money policy set by the US Fed to stimulate growth that had led to a flood of dollars.
State-run oil refiners boosted demand as they came back to the market after more than two months of enjoying a special Reserve Bank window for dollars.
The Indian currency has lost 2.09 rupees or 3.4% in five straight sessions and is at its lowest since September 10. Experts expect rupee to trade in the 62-66 range to the US dollar over the next two months due to concerns linked to assembly elections and concerns that the US Fed will begin tapering bond purchases soon.
“The dollar’s strength is generally due to demand from everybody including importers, foreign banks, FIIs (foreign institutional investors) and nationalised banks,” said Anil Kumar Bhansali, vice-president at currency risk management firm Mecklai Financial. “There are hardly any supplies expect from state-run banks,” he said.
The rupee opened lower at 63.35 against dollar and moved in a range of 63.30 to 63.84 per dollar before settling at 63.71, reflecting a fall of 0.74% in the day.
“The rupee is likely to trade weak in the near future as oil marketing companies have entered the forex market for their dollar requirements and talks of early tapering by US Fed Reserve will keep global investors nervous,” said Anindya Banerjee, currency analyst, Kotak Securities.