Rupee logs 1st fall in 5 days, drops 23 paise against US dollar

The rupee today registered its first loss in five straight sessions, tumbling by 23 paise to close at 66.87 against the US currency in a highly volatile trade.

Sluggish local equity markets, steady capital outflows and rise in crude prices predominantly dampened forex market sentiment.

After crashing to a fresh 14-month low of 66.91 a dollar last Wednesday, the Indian currency started recovering.

For the last few weeks, there has been a host of domestic and global factors leading to substantial slide in the domestic currency with crude and commodity prices running higher.

A forex dealer said that concerns over fiscal imbalance due to trade deficit, ongoing US-China trade tariff tiff and looming political uncertainties could further hit sentiment, a forex dealer commented.

Moreover, the rupee's movement will be influenced by the Reserve Bank of India's stance on intervention in the foreign currency market, he added.

Meanwhile, the US dollar continued to trade with a soft tone ahead of the all-important non-farm payrolls in early US session.

On the global energy front, crude pries edged higher largely extending overnight gains well supported by a possible fresh US sanctions against Iran. The self-imposed US deadline for making a decision on Iran is May 12.

Brent crude, an international benchmark, was trading lower at USD 72.98 a barrel in early Asian trade.

The rupee started with a mild negative bias at 66.65 from Thursday's close of 66.64 at the inter-bank foreign exchange (forex) market.

However, the follow-through weakness eventually pulled down the home currency to hit a fresh intra-day low of 66.92 in mid-afternoon deals as state-run and private banks stepped up dollar purchases for their importer clients.

The local unit finally settled the day with a steep loss of 23 paise, or 0.35 per cent, at 66.87 a dollar.

For the week, it has depreciated by another 21 paise.

The past four weeks have been brutal for the Indian currency.

The RBI, meanwhile, fixed the reference rate for the dollar at 66.7681 and for the euro at 79.9682.

The benchmark 10-year bond yields, however, ended steady at 7.73 per cent.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 92.25.

In the cross currency trade, the rupee fell back against the pound sterling to close at 90.67 from 90.51 and retreated against the euro to end at 80.00 as compared to 79.80 yesterday.

It also dropped further against the Japanese yen to close at 61.38 per 100 yens from 60.97 earlier.

Elsewhere, the euro lost further ground against the US dollar in the face of disappointing macro data after the Eurozone composite PMI combining the measures of the economic activity in services and manufacturing inched lower to a 15-month low in April with Geman services PMI falling to 19-month low.

The economic slowdown reflects partly the deceleration from the eleven-and-a-half-year peak in January of this year.

The British pound remained under pressure as markets continue to price out expectations for a BoE rate hike next week amid Brexit related uncertainty.

In forward market today, premium for dollar drifted due to sustained receiving from exporters.

The benchmark six-month forward premium payable in September moved down to 101-103 paise from 103.75-105.75 paise and the far-forward February 2019 contract also declined to 228-230 paise from 233-235 paise yesterday.