Rupee tumbles 20 paise on buoyant dollar, capital outflows

Heavy offloading by foreign portfolio investors also weighed on the rupee

The rupee, on Thursday, retreated from two-month high levels due to a strong dollar globally and capital outflows, tumbling by 20 paise to close at 66.63 against the US currency.

A smart rebound in the US dollar in overseas markets post US presidential poll results and sustained capital outflows from debt and equity markets hit the rupee sentiment, a forex dealer said.

Though the domestic unit resumed on firm footing, with the currency hitting a fresh two-month high of 66.3350 on initial dollar unwinding by speculative traders amid a rally in local stocks.

But, later the rupee fell back to hit a session low of 66.65 due to frantic buying by importers and corporates. It concluded at 66.63, showing a sharp loss of 20 paise, or 0.30 per cent. It had ended at a two month high of 66.43 yesterday.

Heavy offloading by foreign portfolio investors (FPIs) also weighed on trade as they sold shares worth Rs 2,095 crore on Wednesday. FPIs sold shares worth Rs 733 crore today, provisional bourses data showed.

A spectacular rally in domestic stocks alongside fading Fed rate hike prospects even failed to arrest the fall, a forex trader said.

On the global front, after an initial wobble the American currency rebounded sharply to its highest level in two weeks and continued its surge aftermath of the US presidential election jitters, an analyst said.

The dollar index was quoted higher 0.31 per cent at 98.97 in the afternoon trade.

Meanwhile, the RBI today fixed the reference rate for the dollar at 66.42 and euro at 72.7113.

In cross-currency trades, the rupee ended virtually steady against the pound sterling at 82.59, but rebounded sharply against the euro to settle at 72.61 as compared to 73.71 on Wednesday.

It also regained against the Japanese yen to finish at 62.47 from 64.47 per 100 yens earlier.

In the forward market, premium for dollar remained under pressure owing to sustained receiving by exporters.

The benchmark six-month premium for April slipped to 159.75-160.75 paise from 163.5-165 paise and the far-forward October 2017 contract also declined to 333.75-334.75 paise from 337.5-338.5 paise.

Meanwhile, stock market found its winning ways today as Sensex rose over 265 points and Nifty reclaimed the key 8,500-level on emergence of rally in bank stocks in anticipation of rise in deposits after withdrawal of high value notes and investors coming to terms with US poll result.

The 30-share Sensex concluded at at 27,517.68, showing a gain of 265.15 points. The Nifty also gained 93.75 points, or 1.11 per cent, to end at 8,525.75.