Re falls on talk of dollar purchases by importers

The rupee fell to a two-month low on speculation importers will boost dollar purchases ahead of the month-end to pay bills. The rupee declined 0.4% to 45.58 per dollar at the close of trade on Tuesday. It fell to as low as 45.675 earlier, the weakest level since September 23.

The Dollar Index, which tracks the greenback against the currencies of six major US trading partners, gained for a second day as a warning by Moody's Investors Service on Ireland damped sentiment toward higher-yielding emerging-market assets. The rupee weakened for a third successive day as the Sensex lost 1.3%.

"The rupee is weaker, in line with the dollar's advance against other currencies including the euro," said Naveen Raghuvanshi, a currency trader at Development Credit Bank in Mumbai. "Equities, too, are showing a negative trend. Dollar demand from importers should rise before the end of the month."

A "multi-notch" downgrade of Ireland's credit rating was "most likely" because a bailout of its banks would increase the island's debt burden, Moody's said on Monday. Offshore forwards indicate the rupee will trade at 46.41 to the dollar in three months, compared with expectations of 45.94 on Monday.