Rupee drops by 16 paise to over 1-month low on strong dollar demand

The rupee depreciated by 16 paise to settle at more than one-month low of 73.87 against the US currency due to month-end dollar demand from importers and the greenback's gains against major currencies.

Losses in domestic stock markets and uncertainty ahead of expected fresh stimulus measures also weighed on the investor sentiment.

At the interbank forex market, the rupee opened on a positive note at 73.70 against the greenback, but soon pared gains to touch an intra-day low of 73.93.

The local unit finally settled at 73.87, registering a decline of 16 paise over its previous close of 73.71. This is the lowest closing level since September 24 when the rupee had settled at 73.89. “Indian rupee fell along with other Asian currencies following risk-off sentiments. Hopes of government decision to introduce more stimulus before the Diwali festival capped the rise,” said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.

The dollar is strong versus major peers on month-end portfolio rebalancing, with investors focusing on the next week's US presidential election and the global rise in virus infections, he added.