Rupee loses ground for 3rd day, ends 18 paise down to 68.23

Mumbai: The rupee continued to slide against the American currency for the 3rd day, slipping by another 18 paise to close at a fresh 29-month low of 68.23 on persistent dollar demand from banks and importers despite lower greenback overseas after the US Fed kept interest rates unchanged.

Sustained month-end dollar demand from importers, mainly oil refiners, affected the rupee value against the dollar, a forex dealer said.

The domestic unit resumed lower at 68.13 per dollar as against yesterday's closing level of 68.05 at the Interbank Foreign Exchange market and dropped further to 68.25 before finishing at 68.23, showing a loss of 18 paise or 0.26 percent.

It has dropped by 60 paise or 0.89 percent in the last three trading days.

The domestic unit hovered in a range of 68.01 and 68.25 per dollar during day.

The dollar index was down by 0.08 percent against a basket of six currencies in early trade.

Globally, oil prices tumbled in Asia today after US commercial crude stock climbed to a record level, stoking worries about a global oversupply of the commodity.

The dollar weakened against the euro yesterday at the New York market after the release of an updated monetary policy statement from the Federal Reserve.

The dollar was almost unchanged against the yen in Asia trade today, with many investors reluctant to make major moves ahead of a closely-watched policy decision by the Bank of Japan due Friday.

Market sentiment worsened after the Federal Reserve raised concerns about financial market turbulence and slow overseas economic growth, but didn't rule out a March rate increase.

Pramit Brahmbhatt of Veracity Financial Services said, "The rupee opened on a remarkable negative note after the announcement of unchanged interest rate by Fed. And we saw rupee continued to slip below 68 levels. There was subdued movement in domestic equity market which closed with a nominal loss of 23 points. Thus rupee closed with a loss of 18 paisa at 68.23 levels.

Trading range for spot USD/INR pair is expected to be within 68 to 68.5 levels.

In forward market, premium for dollar dropped further on sustained receivings from exporters.

The benchmark six-month premium payable in June moved down to 174-176 paise from 178.75-180.75 yesterday and far forward December 2016 contract also fell to 381-383 paise from 386.5-388.5 paise.

The RBI fixed the reference rate for the dollar at 68.0858 and for the euro at 74.0637.

In cross-currency trades, the rupee dropped further against the pound sterling to end at 97.53 from 97.39 yesterday and the euro also moved down further to 74.43 from 73.99.

However, the domestic unit recovered against the yen to 57.39 from 57.52 per 100 yen.