Rupee on Wednesday fell 36 paise to end at an over seven-week low of 60.39 against the US dollar as growing unrest in Iraq pushed up crude and caution prevailed in the currency markets ahead of the outcome of US Fed meeting.
A sharp fall in local equities amid slow down in capital inflows too had a negative impact on the rupee, say dealers.Global crude oil prices rose further and the benchmark crude oil for July delivery added 41 cents to $106.77 on New York MercantileExchange as militants, early morning today, attacked Iraq's largest oil refinery. As a result, importers, mainly oil refiners, went on a dollar buying spree.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 60.28 and moved erratically in a wide range of 60.06 and 60.54 before settling at 60.39, a net fall of 36 paise or 0.60 per cent. Today's closing level was the weakest for the rupee since 60.42 on April 29.Meanwhile, sensex washed out major part of previous day's gains on across-the-board selling and closed down about 275 points on Wednesday as rising crude prices due to worsening Iraq unrest threaten India's economy, already reeling under price rise and slowing growth.
The market got a jolt when the news of militant attack on Iraq's main oil refinery this morning filtered in. As a result, Sensex plunged by over 400 points mid afternoon.The benchmark S&P BSE Sensex reacted sharply downwards by 274.94 points, or 1.08 per cent . FIIs picked up shares worth Rs48.02 crore on Tuesday, as per provisional data.
Pramit Brahmbhatt, Veracity Group CEO, said: "Today rupee lost more than half a per cent during the day taking cues from local equities which closed weak on profit booking.