Breaking its two-day gaining string, the rupee on Thursday dropped by 20 paise to 49.21/22 against the US currency on dollar demand from importers and fall in equity markets.
Fresh dollar demand from importers, mainly oil refiners, weighed on the rupee as geopolitical concerns in the Middle East continue be a strong factor supporting oil prices.
However, capital inflows and weak dollar overseas cushioned the rupee fall. The FIIs invested $132.91 million yesterday, as per Sebi data.
“Rupee depreciated today taking cues from weak local equities which closed down also the dollar demand from oil importer weakened the rupee further,” Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said. “Rupee is expected to trade between 48.90 - 49.40 levels tomorrow,” he added.
At the Interbank Foreign Exchange (Forex) market, the domestic currency resumed lower at 49.07/08 a dollar from last close of 49.01/02 and immediately touched a high of 49.04.
However, later it touched a low of 49.25 before concluding at 49.21/22, showing a fall of 0.41 per cent.
Widening current account deficit amid concerns over the rising global crude oil prices also put pressure on the rupee.
The BSE barometer Sensex today tumbled by 168.71 points or 0.95 per cent.
The dollar index, a gauge of six major currencies, was down by 0.07 per cent while New York crude oil was trading above USD 107 a barrel in European market today.
In Sydney market, the dollar drifted lower in the early trade after notching big gains the previous day on testimony from Federal Reserve Chairman Mr Ben Bernanke.
The rupee premium for the forward dollar moved down further on sustained receivings by exporters.
The benchmark six-month forward dollar premium payable in August ended lower at 177-179 paise from overnight close of 180-182 paise and far-forward contracts maturing in February also settled weak at 302-1/2-304-1/2 paise from 306-308 paise.
The RBI has fixed the reference rate for the US dollar at 49.1545 and for euro at 65.5692.
The rupee declined further against the pound sterling to end at Rs 78.47/49 from last close of Rs 78.08/10 while remained firm against the euro to Rs 65.55/57 from Rs 65.83/85. It also improved further against the Japanese to Rs 60.74/76 per 100 yen from last close of Rs 60.89/91.