Mumbai: Declining for the sixth consecutive session, the rupee tumbled by 59 paise to nearly 2-year low at 64.78 against the US dollar on sustained demand for the American currency from banks and importers on the back of firm greenback overseas following yuan devaluation.
The rupee resumed lower at 64.55 as against yesterday's closing level of 64.19 at the Interbank Foreign Exchange (Forex) market and dropped further to 64.94 before ending at 2-year low of 64.78.
The domestic currency has tumbled by 104 paise, or 1.63 per cent, in last six trading days. It hovered in a range of 64.55 and 64.94 during the day. China's surprise decision to devalue the yuan sparked a sell-off in global currencies.
The ones that were worst hit were those from economies whose exporters either rely on Chinese companies to buy their products or compete with their exporters for customers.
In the global market, the US dollar hit a fresh two-month high against the Japanese yen today while resource-related currencies such as the Australian dollar fell sharply against the US dollar, as Chinese authorities guided the yuan even lower.
China further guided its currency lower today after it roiled markets yesterday with its decision to push their currency down 1.9 per cent against the US dollar, the largest devaluation in years.
Oil prices extended losses in Asia today as Chinese economic worries and over-supply concerns added to downward pressure, analysts said. Meanwhile, persistent fall in equity markets also affected the sentiments as the benchmark BSE Sensex ended lower by 353.83 points, or 1.27 per cent, to settle at 27,512.26.
However, the US dollar index, which measures greenback's strength against a trade-weighted basket of six major currencies, was down by 0.80 per cent in early trade.
Veracity Group CEO Pramit Brahmbhatt said, “Today also, the rupee traded low and depreciated by almost one per cent for the day as China allowed yuan to drop for the second day.”
The depreciated rupee will certainly help the exporters but importers will have to face the losses if their positions are not hedged.
The trading range for the Spot USD/INR pair is expected to be within 64.25 to 65.25. In the forward market, the premium for dollar eased further on persistent receivings from exporters.
The benchmark six-month premium payable in January declined further to 205-207 paise from 205.5-207 paise yesterday and far-forward contracts maturing in July, 2016 also fell further to 429-431 paise from 431-432 paise.
The RBI fixed the reference rate for the dollar at 64.82 and for the euro at 71.82. The rupee declined against the pound sterling to close at 101.00 from 100.01 yesterday and moved down further against the euro to 72.20 from 70.84.
The domestic currency fell further against the Japanese unit to 52.14 per 100 yen from 51.39 yesterday.