Mumbai | The rupee today dropped by 8 paise to close at 68.94 against the US currency, extending its fall for a second straight day due to sustained dollar demand from importers even as local equities hit a record high.
The rupee plunged below the 69 mark in early session to trade near its all-time low levels due to overnight gains in the dollar against global currencies. However, local unit regained some lost ground towards the tail-end as overall trading mode turned little positive after the dollar lost strength against the euro, pound and safe haven Japanese yen.
The dollar index was down 0.16 per cent at 94.48 against overnight levels of 94.84. Domestic forex sentiment also remained shaky due to ongoing tensions between the US and other global economies, a dealer said.
Currency traders also reacted negatively to comments by President Trump on EU and China for manipulating their currencies and keeping interest rates lower, raising concerns that the current global trade tensions could be followed by a currency war. Most Asian peers were also trading weaker against the greenback.
On the energy front, crude prices trade little changed as rising tension between the US and Iran highlighted risks to supply. The benchmark Brent was trading 20 cents up at USD 73.26 a barrel.
The rupee resumed sharply lower at 68.96 compared to 68.86 previously at the Interbank Foreign Exchange market.
It lost ground to hit a session low of 69.08 in mid-morning deals due to steady dollar demand, but managed to cut losses short and ended at 68.94, down by 8 paise or 0.12 percent. The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 69.0530 and for the euro at 80.5434.
The bond market, however, staged a recovery and the 10-year benchmark yield settled lower at 7.78 percent. In the meantime, equities maintained their upbeat trend with both the benchmark indices – Sensex and Nifty closing at life-time high levels on the back of encouraging earnings. In the cross-currency trade, the rupee remained under pressure against the pound sterling to settle at 90.52 per pound from 90.50 and softened against the euro to finish at 80.69 from 80.68 earlier. It also edged lower against the Japanse yen to close at 62.08 per 100 yens from 62.00.
In forward market today, premium for dollar showed mixed trading activity due to lack of market moving factors. The benchmark six-month forward premium payable in November was steady at 103-105 paise, while the far-forward May 2019 contract edged up to 253-255 paise from 252-50-254.50 paise yesterday.
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