Indian rupee closes at 54.33 against dollar

India’s rupee reacted downwards from nearly 3-week intra-day high of 53.90 and closed 32 paise down at 54.33 against the Greenback during the week under review following distinctly weak local equities amid fresh dollar demand from importers and some banks.

Dovish statement by the RBI over the future cut in the key interest rates following higher inflation and political mess after the DMK withdrew the support of the Congress-led UPA government at the Centre over the issue of alleged human rights violations of Tamils in Sri Lanka also disappointed the market, a forex dealer said. Continued capital inflows and weak USD overseas after the mid- week failed to stem the fall in the rupee, he added.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed the week lower at 54.28 a dollar from preceding weekend’s close of 54.01, but recovered later on Tuesday in early morning to a high of 53.90 on hopes of key rates cut by the RBI, level not seen since February 28, 2013 when it had logged an intra-day high of 53.60.

However, despite the short-term lending and borrowing (repo and reverse repo) rates cut by 0.25 percent by the apex bank, the rupee fell back on dovish statement by the RBI that there is limited scope for the rate cut in immediate near future due to rising inflation and higher current account deficit (CAD).