FM's reform talk draws blank; Rupee down 19 paise

After a day's respite, rupee on Thursday continued its downward spiral and closed 19 paise lower at 57.98 against the dollar on weak stocks and disappointment over lack of concrete measures in Finance Minister P Chidambaram's reform talk.

Fresh dollar demand from importers and some banks also weighed on the rupee while weak dollar overseas forced some exporters to offload the US currency, dealers said.

At the Interbank Foreign Exchange market, rupee resumed sharply lower at 58.10 a dollar from previous close of 57.79.

It dropped further to a low of 58.56 after hopes of major steps like NRI bond issuance by the government were not announced by Chidambaram in the press conference in New Delhi.

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While dollar demand from importers weighed, the rupee bounced back on dollar selling by exporters on hopes of further fall in the dollar value in global markets.

Rupee touched a high of 57.94 before settling at 57.98, showing a fall of 19 paise or 0.33 per cent.

On Wednesday, it had gained 60 paise, snapping a five-day losing run.

"The rupee was seen depreciating during the Finance Minister's speech in which he did not announce any concrete measure that the investors were hoping for," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

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The dollar index, which tracks the performance of the US unit aginst a basket of six major rivals, traded negatively and traded at three-month lows.

Selling of dollars by exporters helped the rupee pare early losses, according to Ashtosh Raina, Head of Foreign Exchange Trading, HDFC Bank.

"Rupee can appreciate. Government has indicated some steps and am sure the RBI will do its share to stem the slide," said Srinivasa Raghavan, EVP (Treasury), Dhanlaxmi Bank.

On Wednesday, government hiked the G-Sec limit for foreign investments by $5 billion. RBI has recently taken steps like hiking cap for online repatriation of export proceeds.