Rupee depreciates 6 paise to 66.77 against US dollar

NEW DELHI: Extending its recent losses, the rupee fell 6 paise to 66.77 against the dollar on Wednesday ahead of an extended weekend.

The domestic currency had declined 18 paise to close at 66.71 a dollar on Tuesday amid persistent dollar demand from banks and importers.

The fall in the exchange rate could have been severe in the previous session following terror attacks in Brussels, Belgium, but the Reserve Bank of India (RBI) likely sold dollars through state-owned banks to support the local unit, a Reuters report said, citing three currency traders.

“The key factors, which will drive the domestic currency, are global sentiment and foreign flows. The period post the FOMC meet has seen the US dollar reiterating quite sharply from its highs, and is reflected on the dollar-rupee exchange rate. But over the last two days, some FOMC members have been indicating that the expectations of rate cuts should not be kept too low,” said Badrish Kulhalli, Fund Manager Fixed Income at HDFC Life.

“Obviously, these are still one or two voices. We have to wait and see evolution of data to see how the dollar index moves again, but USD-INR moves will be relative to the USD strength and its movement against other emerging markets,” Kulhalli.

The dollar index, which tracks the movement of dollar against a basket of six major world currencies, rose 0.04 per cent to 95.68.

The domestic currency market will remain closed on Thursday on account of Holi and Friday for Good Friday.