Rupee weakens past 45 a dollar as stock market losses weigh

The rupee weakened past 45 per dollar for the first time since November 2006 on Wednesday as stock market losses raised expectations of more foreign fund outflows while strong dollar demand from foreign banks weighed.

The rupee closed at 45.12 per dollar, 0.62% weaker than Tuesday’s close of 44.84.

The breaching of the crucial 45-level by the rupee against the US dollar for the first time in 21-month may augur well for exports in the country, but is likely to fuel inflation further, which is hovering over 12 per cent at present, experts feel.

"The huge demand for dollar and mismatch in supply have led to the continuous pressure on rupee, while foreign inflows have also slowed down this year. The depreciation could be a cause of concern for the inflation levels in the country as well although it may help the exporters," Punjab National Bank General Manager Arun Kaul said.

The Indian rupee today breached the crucial 45-level against the US currency for the first time after November 2006 following sustained appreciation in dollar against major currencies in overseas markets.

Marketmen believe the uncertainty in the forex market is likely to continue for the coming days and the decline of rupee would obviously impact the imports of the country, with the main one being crude oil.

"After breaching the 45 a dollar mark, the rupee is likely to face strong resistance in the 45.5 to 46 a dollar range. And it is unlikely that it might drop further to 46 levels. It is likely to consolidate at current levels for the next 10-15 days," brokerage firm SMC Global Vice President Rajesh Jain said.

The Indian rupee, which has seen appreciated to as much as 39 against the dollar last year, but the INR has again started depreciating since June this year.