Rupee on a losing streak, hits 63.64 a dollar

The rupee extended losses for the fifth day on Tuesday, falling 38 paise to 63.64 against the dollar in the afternoon trade on the interbank foreign exchange market on persistent dollar demand.

The Indian currency started weakening since last week after the oil companies partially shifted their dollar purchase to the market.

The rupee hovered around 63.35-63.62 levels against the dollar as domestic demand for dollars far outweighed flows of foreign capital into domestic stocks.

The rupee opened 9 paise lower at 63.35 per dollar against its Monday's close of 63.26 against the US currency amidst persistent dollar demand from oil importers and banks.

A stronger dollar in overseas markets also weighed on the rupee sentiment, dealers said.

Economic affairs secretary Arvind Mayaram had, last week, said the state-run oil companies were sourcing 30-40 per cent of the dollar requirement through the open market and not via the special window provided by RBI, which prompted currency speculators to get back into action.

Speculators act on the basis of the country's insatiable need for dollars and fears that the US Federal Reserve would start winding down its stimulus as early as next month, chocking dollar flows that India disparately needs.

The immediate trigger for rupee weakness, however, is RBI's closure of a swap window for state-run oil marketing companies and shifting part of the dollar demand to the forex market.

Another RBI initiative, the opening of a swap window for dollar deposits, is also expected to end this month.

In August, the RBI took oil companies, the biggest purchasers of dollars, out of the open market through a swap deal. A month later, the central bank also struck a swap deal with banks for foreign currency deposits (FCNR (B)) that have so farfetched the RBI nearly $17.5 billion.

In the overseas currency futures market, one-month implied volatility of the rupee fell 38 basis points, or 0.38 percentage point, to 13.12 per cent.

Offshore non-deliverable rupee contracts declined 0.3 per cent to 65.19.  Non-deliverable contracts are settled in dollars.