Rupee after a few days of showing strength against the US dollar, on Tuesday registered the biggest drop in the last two weeks. The currency slid 54 paise and finally closed at Rs 63.37 per dollar.
The weakness came due to heavy dollar buying by importers just before the two day Federal Reserve’s policy meeting. Experts also added that forex traders also booked profits on their rupee trades that further added pressure on the rupee.
Rupee fell to Rs 63.64 before recovering a little before settling at 63.37, a fall 0.86 per cent. After September 3, it was the biggest drop in the currency. Abhishek Goenka, CEO of India Forex Advisors stressed that the bad inflation numbers had dented the trader sentiment. He further added, “Going ahead, the two-day FOMC meeting starting Tuesday and the RBI monetary policy on September 20 will be driving the markets.”
Experts said that going forward all eye would be on the announcements made from the Federal Open Market Committee (FOMC) meeting. The two meeting started on Tuesday and it is expected that the Feds would take the decision to reduce the pace of their bond-buying programme.
Prior of the FOMC meeting, impact of stimulus tapering was also seen on the Indian stock markets. Amid a choppy session, on Tuesday Sensex gained 61.56 points and closed at 19,804.03 points. The broader index Nifty rose by 9.65 points and finally managed to close in green at 5,850.20 levels.
Experts said that investors used the depreciation in the currency to buy IT stocks. IT stocks rose as the rupee weakened against the dollar after closing at 62.83 on Monday.