Rupee hits fresh 6-month low at 55.47 per dollar

MUMBAI: The Indian rupee closed at a fresh six-month low on strong demand for the dollar from oil importers as markets awaited US Federal Reserve chief Ben Bernanke's statement on rolling back its Quantitative Easing (QE) programme if US shows signs of recovery.

"The rupee may test 56 per dollar in near term as depreciating yen continues to lend strength to dollar," said Kishore Narne, associate director head - commodity & currency, Motilal Oswal Commodity Broker.

The Indian rupee fell to a fresh six month low of Rs 55.47 per dollar, losing six paise further from its previous close, as importers' demand for dollars weighed on the local currency, apart from the dollar gaining against most major currencies ahead of Bernanke's statement.

There is expectation that the Fed chief may decide to go slow on Quantitative Easing (QE), which will be dollar positive. If the Federal Reserve decides to roll back Quantitative Easing, tightness in liquidity may lead to risk aversion among investors. They may return to safe assets like US treasuries instead of putting money into high yielding risky assets.

"The near-term weakness is attributable to dollar strengthening against most rival currencies as Federal Reserve continues to signal rolling back of its monetary easing programme, or Quantitative Easing, by end of 2013," Narne said.

But the rupee in the medium term is expected to recover from these lows.