Rupee drops again

Mumbai: : India's rupee fell a second day, retreating from the strongest level in three months, on speculation oil companies boosted purchases of the dollar. The local currency had gained earlier after the government raised the duty on bullion and platinum to 6 per cent from 4 per cent, as part of efforts to narrow the current account deficit.

Gold purchases comprise about 80 per cent of the shortfall in the current account, according to the central bank. A decline in the benchmark stock index also raised concerns that capital inflows may slow, according to Sudarshan Bhatt, chief currency trader at state-run Corporation Bank.

"Importers, particularly oil companies, took advantage of the currency's initial gains to buy dollars," said Mumbai-based Bhatt. "Concerns over the large trade gap remain."

The rupee weakened 0.1 per cent to 53.8075 per dollar in Mumbai, according to data. It touched 53.38 earlier, the strongest level since October 23. One-month implied volatility in the rupee, a gauge of expected moves in the exchange rate used to price options, was little changed at 10.35 per cent.

India's current-account deficit swelled to a record $22.31 billion in the quarter ended September 30, central bank data show. Indian shares retreated for the first time in four days, with the BSE India Sensitive Index, or Sensex, losing 0.6 per cent.

Foreigners have bought a net $2.67 billion of shares this year, 94 per cent more than at the same time in 2012, data from the regulator show.


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