Rupee hits 2-month low against dollar on US rate hike fears

The Indian rupee today fell to two-month low and closed with a sharp 39 paise loss at 62.55 against the US dollar after better-than-expected jobs data spurred expectations of an early hike in US interest rates.

Fresh dollar demand from importers amid strong cues in overseas markets and a steep fall in local equities also weighed on the rupee value.

The dollar gained as strong payrolls data raised bets of a Fed rate hike, as early as summer.

This pushed the dollar index to fresh 11-year high. At the Interbank Foreign Exchange (Forex) market, the Indian rupee opened lower at 62.60 against last Thursday's close of 62.16.

It declined further to a two-month low of 62.7350 -- a level not seen since January 8, 2015 when it touched an intra-day low of 63.20.

Later, it recovered some ground to touch a high of 62.53 before concluding at 62.55, still showing a fall of 39 paise or 0.63 per cent.

The Indian benchmark S&P BSE Sensex was down by 604.17 points or 2.05 per cent -- its biggest fall in last two months.

Foreign Portfolio Investors (FPI) bought shares worth USD 226.36 million last Thursday, as per Sebi data.

Pramit Brahmbhatt, Veracity Group, CEO said,"The trading range for the spot rupee is expected to be within 62.00 to 63.00."