Mumbai: The rupee dropped 0.3% on Wednesday, off a two-week low struck during trade, as the dollar’s rise against major currencies triggered demand for the US currency from importers such as oil refiners.
“The dollar’s strength versus pound and euro raised some (dollar) demand from oil companies,” said a senior dealer with a foreign bank.
The partially convertible rupee ended at 45.93/94 per dollar, extending losses for a second day, after hitting 45.9950, its weakest since 6 January. It had closed at 45.78/79 on Tuesday.
A choppy stock market offered little support, and the dealer at the foreign bank said traders would watch share price movements on Thursday for cues on foreign fund flows.
“I see the rupee trading in the range of 45.85 to 46.10 to the dollar tomorrow,” he said.
The BSE benchmark Sensex dropped for the second successive day, shedding 0.1% to its lowest close in over a week as weak world markets weighed.
The index of the dollar against six major currencies was up 0.7%.
The dollar’s rise was boosted by a fall in commodity currencies on reports some Chinese banks have been instructed to curb lending and the euro’s break under a key support level.
Traders said the stronger dollar boosted demand from refiners. Oil is India’s biggest import and refiners are the largest buyers of dollars in the local currency market.
One-month offshore non-deliverable forward contracts were at 45.97/46.06, slightly weaker than the spot rate.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were at 45.9725 and 45.96 respectively.