India rupee falls to 61.83 to the US dollar for second day on hopes of US debt deal

Indian rupeeThe deal will likely go through last minute but either way the Indian rupee will weaken further.

The Indian rupee weakened for a second session on Tuesday as the US dollar rallied broadly on hopes American lawmakers would agree on a deal to raise the country's debt limit, averting an immediate default.

The plan being negotiated by U.S. Senate leaders would end a partial government shutdown and raise the debt ceiling by enough to cover the nation's borrowing needs at least through mid-February 2014, a source familiar with the negotiations said.

The index of the dollar against six major currencies rose to a one-month high of 80.678, pushing the rupee to session lows in the last hour of trade.

Rupee Dollar today October 15

"The market is not positioned big yet for the 17th of October. It is not ready for a repeat of the 2008 mayhem with more intensity," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.

"The deal will likely go through last minute but either way the rupee will weaken further. If the deal doesn't go through, the fall would be much more," he added.

The partially convertible rupee closed at 61.8350/8450 per US dollar on Tuesday compared to 61.55/56 on Monday. It moved in a wide band of 61.25 to 61.94 range during the session.

Financial markets will remain closed on Wednesday for a religious holiday.

Traders said choppy domestic shares also provided little comfort to the rupee, while expectations the Reserve Bank of India would raise interest rates late this month also weighed after data late on Monday showed annual consumer price inflation quickened more than expected to 9.84 percent in September.

Data on Monday had showed wholesale price inflation also accelerated more than expected.

In the offshore non-deliverable forwards, the one-month contract was at 62.30 while the three-month was at 63.32.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views expressed in comments published on indianexpress.com are those of the comment writer's alone. They do not represent the views or opinions of The Indian Express Group or its staff. Comments are automatically posted live; however, indianexpress.com reserves the right to take it down at any time. We also reserve the right not to publish comments that are abusive, obscene, inflammatory, derogatory or defamatory.