Rupee hits an over 11-month low of 56.50 against dollar

The Indian rupee continued its declining trend, ceding 12 paise at 56.50 to a dollar at the close of trading on the inter-bank foreign exchange market today, amidst a massive fall in equities.

The rupee commenced lower at 56.50 against the US currency, down from its previous close of 56.38 to a dollar. The Indian unit went down further to hit 56.76 to a dollar, its lowest since 28 June 2012, before closing at 56.50 against the dollar.

The rupee was hammered by FII outflows of $90 million from the stock markets, falling GDP and RBI's pessimism over any continued decline in commodity price inflation.

Dollar demand related to defence payments and month-end imports also hurt rupee, forex dealers said. However, the RBI did not intervene to arrest the rupee fall, dealers said.

With today's fall the rupee has lost about 87 paise or 1.56 per cent to the dollar in one week while it lost 4.8 per cent in value against the dollar during the whole of May -- the worst monthly decline in 12 months.

The dollar index was up 0.31 per cent against a basket of six major global currencies and the rupee's fall despite the dollar's weakness shows the sensitive situation in which the rupee is at present.

is quite sensitive and the rupee has weakened today despite the fact that the dollar weakened overseas. The primary force that had been driving the rupee down in the previous 10 days or so was dollar strength and even though that has reversed, the rupee has weakened further.

However, the premium for forward dollar softened further on sustained receipts by importers. Benchmark six-month forward dollar premium payable in November eased to 168-170 paise from last close of 169-1/2-171/1-2 paise.

Premiums for contracts maturing in May also moved down to 333-335 paise from 334-336 paise.

The RBI fixed the reference rate for the US dollar at 56.4958 and for the euro at 73.6807.

The rupee fell against the pound sterling to end at 85.97 from Thursday's close of 85.28. It also moved down further against the euro to 73.39 from 73.07. It was down at 56.33 per 100 yen from 55.49 at the previous close.