Failing to hold on to initial gains,the rupee on Monday fell 39 paise to end at 61.27 against the dollar, near a record low, on heavy demand for the US currency from importers.
The rupee opened higher at 60.48 a dollar from the previous close of 60.88 at the Interbank Foreign Exchange Market. It improved to a high of 60.45 as local stocks advanced. Later, the currency fell to a low of 61.30 before settling at 61.27, a drop of 39 paise or 0.64%.
The rupee on August 7 had ended at record low of 61.30.
Finance minister P Chidambaram today said in Parliament the government intends to compress imports of gold, silver, oil and non-essential goods. Other measures to check the rupee's slide and contain the current account deficit are also on the anvil, he said.
"Rupee gained during the early session in anticipation of the fruitful measures from the finance ministry and the RBI," said Abhishek Goenka, founder and CEO of India Forex Advisors.
"However, the rupee erased its gains and started depreciating after the finance minister vowed to contain the current account deficit at 3.7% of GDP but failed to give the crucial details of the same."
The Reserve Bank of India on Thursday said it would auction Rs 22,000 crore of bonds every Monday as an additional measure to drain cash from the financial system and check speculation in the forex market.
The benchmark S&P BSE Sensex today climbed 157.64 points or 0.84%, amid encouraging trade data for July. Exports grew by 11.64% to $25.83 billion in July, snapping two consecutive months of decline. Imports declined by 6.2% to $38.1 billion, leaving a trade deficit of $12.2 billion.
Dollar index, a gauge of six major global rivals, was up by 0.33%. "As the day progressed, oil importers, corporate and short covering weakened the rupee," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "The trading range for the spot USD/INR pair is expected to be within 60.50 to 61.50." Forward dollar premiums shot up on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in January rose to 261-264 paise from Thursday's close of 250-1/2-253 paise and far-forward contracts maturing in July flared up to 489-493 paise from 469-472 paise.
The RBI fixed the reference rate for the dollar at 60.8025 and for the euro at 81.0345.
The rupee dropped to 94.90 against the pound sterling from the previous close of 94.39 and softened to 81.46 per euro from 81.34.
It declined further against the Japanese yen to 63.33 per 100 yen from 63.21