Rupee falls 58 paise, most in a month, to 61.83; Sensex falls 246 points to below 21,000

Mumbai: Weak local stocks and sustained dollar demand from importers led the rupee to its biggest fall in a month on Thurs day, closing 58 paise lower at 61.83 against the US currency.

Renewed fears of the US Federal Reserve tapering its stimulus programme earlier than expected and a firm dollar overseas also weighed on the rupee, a forex dealer said. Continued capital inflows stemmed the rupee fall, he added.

The rupee resumed sharply lower at 61.60 a dollar from the previous close of 61.25 at the interbank foreign exchange market. It gradually improved to a high of 61.49 before succumbing to late heavy selling in domestic equities and dollar demand to a low of 61.90.

The rupee closed at 61.83, a fall of 58 paise, the most since since November 11, when it tumbled by 77 paise.

"It has been a weak session for the rupee amid negative stock markets and fresh demand for dollars from oil companies," said Abhishek Goenka, CEO of India Forex Advisors. "IIP and CPI data which will be released today after market hours will be closely tracked for further cues."

The Index of Industrial Production contracted 1.8 per cent in October, compared with an 8.4 per cent expansion a year earlier, the government said. Retail inflation in November was 11.24 per cent against a revised 10.17 per cent in October.

"The released data was worse than expected. There are also now increased chances of the RBI raising interest rates by 25 bps or even 50 bps," said Admisi Forex India.

The 30-share benchmark Sensex fell for the third day in a row and closed down 245.80 points or 1.16 per cent. Foreign institutional investors bought shares worth Rs 962.71 crore on Wednesday, according to provisional data with stock exchanges.

The dollar index was up 0.10 per cent against a basket of six major global currencies ahead of next week's US Fed meet. "Rupee closed weak against dollar due to increased demand for the US currency from oil importers as well as the local equities, which ended negative," said Pramit Brahmbhatt, CEO of Alpari Financial Services.

Forward dollar premiums dropped further on persistent receipts by exporters. The benchmark six-month forward dollar premium payable in May moved down to 245-247 paise from 249-251 paise previously and far-forward contracts maturing in November declined to 484-1/2 to 486-1/2 paise from 489-491 paise.

The RBI fixed the reference rate for the dollar at 61.6200 and for the euro at 84.9820. The rupee fell to 101.38 against the pound from yesterday's close of 100.39 and to 85.14 per euro from 84.32. It moved down to 60.15 per 100 Japanese yen from 59.76.

Next: Sensex falls 246 points to below 21,000 before inflation data

Sensex falls 246 points to below 21,000 before inflation data

Mumbai: The benchmark Sensex retreated for the third day in a row from an all-time high, dropping 246 points to close below the 21,000 level on Thursday ahead of inflation and industrial production data that may have a bearing on the RBI's policy next week.

Sentiment was also weighed down by weak global trends on increasing expectations the US Federal Reserve would soon start tapering its monetary stimulus programme.

It was the biggest drop in three weeks for the index, which was dragged lower by Tata Motors, ICICI Bank, ITC and Reliance Industries. Auto and bank stocks led 11 of the 12 BSE sectoral indices down, with the power index the sole gainer.

The 30-share S&P BSE Sensex resumed lower, in line with feeble Asian cues on the back of a sharp fall on Wall Street yesterday, and moved in a narrow range. Fag-end selling pulled the index further down and it ended at 20,925.61, a fall of 245.80 points or 1.16 per cent.

It was the biggest drop since November 21. The index has lost 400 points in three sessions.

The 50-share CNX Nifty on the National Stock Exchange slumped 70.85 points, or 1.12 per cent, to 6,237.05. The SX40 on the MCX Stock Exchange fell 136.94 points to 12,432.57.

"Caution is seen in the market ahead of inflation and IIP numbers and also due to revived concerns over US tapering programme," said Rakesh Goyal, Senior Vice President at Bonanza Portfolio Ltd. "Economic concerns, profit booking and global cues are primary reasons for this fall."

The Reserve Bank's Mid-Quarter Review of Monetary Policy is scheduled on December 18. The RBI yesterday said it will focus on controlling inflation and improving liquidity. Tata Motors, the country's largest commercial vehicle producer, fell 4.55 per cent.

Reports said its British luxury car unit Jaguar Land Rover increased its investment guidance for the year ending March 2015, which may increase debt and put pressure on the company's free cash flow. Asian shares closed lower on expectations the Federal Reserve would unwind its stimulus following the provisional budget deal in Washington.