Rupee crosses 68, plummets 30 paise

THE RUPEE started 2017 on a weaker note and plummeted by a whopping 30 paise to 68.22 against the US dollar due to huge demand for the American currency.

Frantic investment outflows from the country against the backdrop of buoyant dollar sentiment largely kept home currency under immense pressure.

Healthy demand for the American unit from importers and corporates too weighed on the rupee alongside subdued trend in local equities, a forex dealer commented.

Indian bourses had a softer start to 2017 as equities were buffeted by concerns surrounding over the post demonetisation drive and upcoming Q3 corporate earnings outlook.

The domestic currency resumed on a weak note at 67.95 from last Friday’s closing level of 67.92 in an extremely quiet trade at the Interbank Foreign Exchange Market.

But it witnessed a sudden bout of volatility in mid- afternoon deals and drifted down to hit an intra-day low of 68.25 before ending at 68.22, revealing a steep loss of 30 paise, or 0.44 per cent.

Meanwhile, the rupee finished the year-2016 with a 2.68 percent annual fall, scripting its sixth consecutive years of decline against the greenback.

A large part of the outperformance was attributed to heavy capital outflows during the fagend of the year, although it rebounded after plunging to historic lows.

Hedge funds and overseas investors have pulled out a massive $4 billion from the Indian capital market in December following rate hike by the US Federal Reserve.

In worldwide trade, the greenback rebounded from a two-week low against a basket of six major currencies on growing expectations that the US Federal Reserve will hike rates as many as three times this year.

The US dollar index was quoted marginally lower at 102.37 in late afternoon trade.

The RBI fixed the reference rate for the dollar at 68.0225 and for the euro at 71.5121.