The Indian rupee fell for a second straight session on Thursday, consolidating after a recent rally as traders braced for an interest rate cut from the European Central Bank that, as expected, was delivered after the close of markets. "The rupee started recovering after the China move in late trade, but the gains will be short-lived, we can expect further weakness tomorrow," a senior dealer with a state-run bank said.
The partially convertible rupee closed at 54.94/95 per dollar, weaker than its previous close of 54.48/49, but off the day's low of 55.2350. The rupee had been at around 55.20 levels when the China rate decision was announced. The rupee had rallied more than 5 percent in the four sessions from June 28 to Tuesday, sparked by hopes of renewed commitment by the government to tackle policy reforms. Investors also saw a currency that earlier in June had hit a record low as oversold.
Technical charts show the rupee could target 55.37, which marks the 38.2 percent Fibonacci retracement of its gains from a record low of 57.32 on June 22 to a high of 54.18 on Wednesday. In the currency futures market, the most traded near-month dollar-rupee contract on the National Stock Exchange, the United Stock Exchange and the MCX-SX all ended at around 55.17. The total volume was at $5.1 billion.
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