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Rupee depreciates on dollar buying

03 Mar 2017 Evaluate

Indian rupee depreciated against the US dollar on Friday, due to fresh demand for the American currency from banks and importers. Traders remained cautious ahead of a speech by U.S. Federal Reserve Chair Janet Yellen, with expectations growing the Fed would raise interest rates soon. Some concern also came with Chief Economic Advisor Arvind Subramanian’s statement that Economic and political systems in India have 'not developed maturity' for nuanced interventions and tend to take recourse to bans and restrictions. Investors failed to get solace with the report that the services sector bounced back to growth in February, after contracting for three months in a row, as businesses recovered from the demonetisation-related disruptions seen in each of the previous three months. The seasonally adjusted Nikkei Services Business Activity Index rose back above the 50.0 no-change mark in February, posting 50.3 from 48.7 in January. Besides, dollar held strong against other currencies overseas along with weak trade in domestic equity market also kept pressure on the local currency.

Finally, the rupee ended at 66.81, 10 paise weaker from its previous close of 66.71 on Thursday. The currency touched a high and low of 66.88 and 66.78 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 66.83 and for Euro stood at 70.35 on March 3, 2017. While the RBI’s reference rate for the Yen stood at 58.55, the reference rate for the Great Britain Pound (GBP) stood at 81.96.The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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