Rupee ends marginally weak despite gains in equity

Indian rupee ended weaker against dollar on Wednesday on account of sustained demand for dollar from banks and importers. The domestic currency looked weak from the very beginning as investors remained cautious after FIIs had turned net sellers in the last two days in both equities and derivatives for the first time this month. Besides, dollar strength against basket of major currencies overseas too hit the rupee sentiment. However, market participants got some comfort with study progress of Goods and Services Tax (GST), which will be implemented from April 1, 2017. The Gujarat Assembly passed the GST Constitution Amendment Bill on August 23 and became the sixth state to do so after Assam, Bihar, Jharkhand, Himachal Pradesh and Chhattisgarh. Passed by Parliament recently, the bill needs to be ratified by at least 15 state legislatures before the President can notify the GST Council which will decide the new tax rate and other issues. On the global front, dollar strengthened against other major currencies as strong U.S housing data overnight increased the chances of an interest rate increase in coming months.

Finally the rupee ended at 67.11, weaker by 5 paise from its previous close of 67.06 on Tuesday. The currency touched a high and low of 67.15 and 67.08 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.13 and for Euro stood at 75.81 on August 24, 2016. While the RBI’s reference rate for the Yen stood at 66.90, the reference rate for the Great Britain Pound (GBP) stood at 88.39.The reference rates are based on 12 noon rates of a few select banks in Mumbai.