MUMBAI (Reuters) - The rupee fell to its lowest in a week on Tuesday, logging a second successive day of loss, as importers continued to buy dollars and a weak euro posed headwinds to the currency.
Dollar demand from importers, particularly oil and gold buyers, has been consistently strong in recent sessions with global commodity prices plummeting, dealers said.
The dollar demand has prevented the rupee from gaining, though recent macroeconomic indicators have signalled a positive turn.
The economy is expected to grow at 6.4 percent in the current fiscal year and the slowdown in economic growth has bottomed out, the Prime Minister’s Economic Advisory Council said in a report on Tuesday, a more optimistic projection than that of most private estimates.
The panel said it expects the full-year current account deficit, seen as the main worry for the economy, to narrow to 4.7 percent in the current financial year from 5.1 percent last year, helped by higher exports and lower gold imports.
The partially convertible rupee closed at 54.38/39 per dollar, weaker than its close of 54.14/15 on Monday. It fell 0.4 percent, its biggest single day fall since April 4.
It had fallen to 54.42 in session, its lowest level since April 16.
Markets will be shut on Wednesday.
“The demand for dollars is much higher from importers and oil companies. If we see some foreign investor outflows in May, the rupee can move towards 55 to the dollar,” said Param Sarma, chief executive at NSP Forex in Mumbai.
The euro hit a two-week low against the dollar on Tuesday after weak German data fanned concerns about the euro zone economy and speculation the European Central Bank could cut interest rates.
Dealers are also closely watching political developments, with key bills lined up for passage in the second half of the budget session of parliament.
In the offshore non-deliverable forwards, the one-month contract was at 54.56, while three-month was at 55.15.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 54.37, with a total traded volume of $5.6 billion.
Editing by Jijo Jacob