Re hits over 11-month low at 56.76; down 26 paise on dollar demand

Continuing its free fall for the fifth straight session, the rupee on Monday slumped by 26 paise to hit a new 11-month low of 56.76 on fag-end dollar buying and capital outflows from local equities.

Forex dealers said bleeding domestic stocks and a weakening bond market firming up the dollar in turn, weighed upon the rupee.

Foreign institutional investors pulled out Rs 86.66 crore (Rs 866.6 million) from local stocks on Monday, as per provisional BSE data.

"The pressure on rupee was mainly built due to fag-end buying by some foreign banks and importers.

"Bond markets were seen slumping, which in turn pushed up the dollar and hit the local currency.

"Capital outflows by FIIs, coupled with weakening stocks also marred the rupee sentiment," said Srinivasa Raghavan, executive vice-president (Treasury) at private-sector Dhanlaxmi Bank.

The rupee commenced weak on Monday at 56.55, below Friday's close of 56.55

against the dollar at the Interbank Foreign Exchange market.

It hovered in a range of 56.40-56.83 before settling at 56.76, a fall of 26 paise, or 0.46 per cent from its previous close. Rupee has fallen by nearly 120 paise in the last five days.

This comes precariously close to rupee's all time low of 57.32 touched last June-end.

The dollar index, a gauge of six major global rivals, was down by 0.18 per cent.

Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said that major resistance for USDINR (Spot) pair is set at 57.00.

"The trading range for the same is expected to be within 56.45 to 56.95," he added.

"In spite of dollar weakness and recovery in euro, rupee depreciated, showing internal demand pressure. The hawkish statement by the RBI Governor (D Subbarao) has turned the sentiment for rupee, helping it to touch 56.81 levels," consulting firm India Forex Advisors said in a statement.