Rupee falls to one-month low on persistent dollar demand

The rupee continued its fall on Tuesday with the currency declining by 32 paise to close at 71.54 against the greenback led by persistent dollar-buying throughout the day. This is the lowest level seen by the currency in a month. During the day, the rupee fell to as low as 71.566 against the dollar.

On Monday, the rupee had declined by 21 paise primarily led by a fall in the Chinese yuan after reports indicated China wants more time to finalise the details of the first phase of the trade deal with the US.

However, the trigger shifted to consistent dollar-demand on Tuesday when the supply of greenback was limited, dealers indicated. “New York was closed on Monday, and as a result of this, the supply of dollar got hit on Tuesday. Furthermore, there was a huge dollar demand as a result of which the market witnessed continued buying since morning. At every 10-15 paise movement, the market saw persistent buying of dollars,” said a forex dealer.

The currency was trading weak in the non-deliverable forwards (NDF) market as well. The one-month rupee NDF was trading 34 paise down at 71.79 against the dollar on Tuesday.

The rupee has depreciated by about 2.48% since the beginning of the year. The dollar index, which tracks the strength of the US dollar against a basket of currencies, was trading at 98.52 on Monday evening, having come down from its 16-month high levels of 99.377 during the end of September.

Meanwhile, foreign portfolio investors (FPIs) have turned net buyers of Indian debt and equity in October, according to Bloomberg data. FPIs have bought $130.50 million worth of equities in October while they sold $30.10 million worth of Indian debt on a net basis this month.