The rupee on Thursday erased initial gains and slipped 32 paise, logging its biggest daily drop in over two weeks, to end at 62.42 versus the dollar in line with weakness in domestic stocks and sustained demand of the American currency from oil importers. The rupee commenced higher at 62.05 a dollar from last close of 62.10 -- a three-week high.
It improved further to a high of 62.03 due to higher opening in domestic equities and initial dollar selling by exporters. Later, it dipped on sluggish stock markets to a low of 62.46, before concluding at 62.42, logging a fall of 32 paise or 0.52 per cent. In last straight two days, it had gained 33 paise or 0.53 per cent.
Thursday's drop is the biggest since 44-paise fall on January 27. "In the last couple of sessions, we have witnessed that India's trade data, IIP and CPI have all been encouraging. However this set of data has failed to give support to the rupee.
On the global front, dollar index is trading flat amid absence of major events or data releases," said Abhishek Goenka, Founder & CEO, India Forex Advisors. The benchmark S&P BSE Sensex Thursday plunged by 255.14 points, or 1.25 per cent, while FIIs injected Rs 211.99 crore on Wednesday, as per provisional data with stock exchanges. The dollar index, an indicator of other six major global currencies, was sharply down by 0.47 per cent ahead of key economic data later in the day on Thursday.
Showing no sign of economic recovery, government data on Wednesday evening showed that industrial output remained in the negative territory for the third month in a row by contracting by 0.6 per cent in December, even as retail inflation eased to two-year low of 8.79 per cent in January.
Meanwhile, forward dollar premiums ended mixed. The benchmark six-month forward dollar premium payable in July moved down further to 239-240 paise from 241-243 paise previously. Far forward contracts maturing in January rose to 484-485 paise from 482.5-484.5 paise previously. The RBI fixed the reference rate for the dollar at 62.2725 and for the euro at 84.8710. The rupee stumbled further against the pound to 103.84 from last close of 102.76 from 102.20. It fell back sharply to 85.32 per euro from 84.58. It also reacted downwards to 61.24 per 100 Japanese yen from 60.65.