Rupee falls for 3rd day

Falling for the third day in a row, the rupee weakened further by 9 paise to end at 74.71 against the US currency on Thursday as weaker domestic equities weighed on the forex market sentiment. Lower crude prices, however, capped the losses in the domestic unit, forex dealers said. Brent crude futures, the global oil benchmark, fell 0.68 per cent to $72.93 per barrel.

The US dollar traded strong against other Asian currencies after the minutes from the last Federal Reserve meeting indicated a tighter monetary policy ahead. According to the minutes released on Wednesday, Federal Reserve officials discussed tapering in the recent meeting as some members indicated that the economic recovery was proceeding faster. However, most members agreed that the US economy had yet to meet the substantial further progress benchmark that the central bank has set for any significant change in policy. At the interbank foreign exchange (forex) market, the rupee opened weak at 74.75 per dollar. It hovered in a range of 74.84 to 74.65 during the session before ending at 74.71 against the greenback.

"Indian rupee in line with other Asian currencies traded lower following risk-averse sentiments. Dollar gained after FOMC minutes. US Long duration Treasury yields continued their decline with benchmark 10-year yield falling to 1.27 per cent, symbolic of a market expecting lower inflation, and slower growth, in the future. However, forex market has not followed this move, with the dollar remaining resilient, as traders focus increasingly on the likely timeline for global monetary policy normalisation," Dilip Parmar, research analyst, HDFC Securities, said.

"Back home rupee drifted lower for the third day in row earlier the crude was the reason, but this time risk-aversion was the name of the game as domestic equities lost around a percentage points in today's trade," Parmar said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.18 per cent to 92.47.