The Indian rupee weakened for a fifth straight session on Monday weighed down by losses in domestic shares and on continued growth concerns as investors pare back expectations of central bank rate cuts next month. An HSBC survey that showed Indian manufacturing growth nearly stalled in May also hit the rupee, further raising worries the economy remains frail at the start of the new fiscal year.
The rupee lost 4.8 percent to the dollar in May - the worst performer in emerging Asia - on the back of unease over the record current account deficit, hawkish comments from the central bank chief and concerns that foreign fund flows will dry up if the Federal Reserve unwinds its monetary stimulus.
"The direction for the rupee is difficult to guess but I think we may see 57 soon," said Uday Bhatt, a senior foreign exchange dealer with UCO Bank. "There is continued demand from oil, gold and defence related payments, we may once again see high import figures for gold," he added. The partially convertible rupee closed at 56.76/77 per dollar, its lowest close since June 28, 2012, after hitting 56.8250, its lowest level since the same day. The pair had closed at 56.4950/5050 on Friday.
In the offshore non-deliverable forwards, the one-month contract was at 57.14 while the three-month was at 57.72. 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 56.99 with a total traded volume of $4.5 billion.