Rupee weakens on dollar demand

MUMBAI, JAN. 2. The rupee weakened against the U.S. currency today on fresh pent-up dollar demand from corporates and importers in fairly active trade at the interbank foreign exchange market. Opening on a soft note at Rs. 46.67/68 a dollar, the Indian currency dipped to intraday lows of 46.70/71, before settling at the close at 46.6950/7000, sharply lower from Monday's finish of 46.66/67.

Bunching of dollar demand from corporates and importers after a long weekend amidst negligible supplies of the greenback following Monday's market closure at New York for ``New year'' were the main factors behind the steep fall in the rupee value, dealers said.

``Dollar supplies remained thin, as there were hardly any inflows in the last two days because New York was closed yesterday. Moreover, pent-up dollar demand further aggravated the situation'', a dealer commented.

Meanwhile, sentiment on the rupee was partly affected by the institute of economic growth (IEG) report that said the rupee is expected to break yet another psychological level of Rs. 47 a dollar in a few months.

The Reserve Bank of India fixed the reference rate at 46.69 a dollar, as against s 46.66 fixed yesterday.

- PTI

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