Rupee weakens 20 paise against USD during week

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Mumbai, Jun 8 (UNI) The Rupee weakened by about twenty paise against US Dollar at 42.66/67 on concerns over hike in fuel prices, stoking rise in inflation rate and dollar's appreciation against some major currencies in the week ended June 6.

The Indian currency started the week on a firm note as the government eased the foreign borrowing norms and traded in a varied range between 42.12 and 42.97 per USD, tracking the local equity markets drove on the global cues, dealers said.

Meanwhile, Reserve Bank of India assured help to the oil companies to meet the dollar demand, which prevented rupee's sharp fall. The domestic fuel price hike hammered the market sentiments, effectively depreciating local unit to touch a low of 42.97 per USD. However, it recovered from the low after RBI supported the dollar demand of oil companies in the week, marketmen observed.

The central bank had said it would directly sell foreign exchange to state-run oil companies to ease the dollar demand to pay for crude imports. Meanwhile, the fuel price hike heightened the expectations of sharp rise in inflation rate to a level of at least 13-months high. The government had raised petrol, diesel and LPG prices by Rs 5 per litre, Rs 3 per litre and Rs 50 per cylinder, respectively, in a move to curb losses at its state-owned refiners but it might stoke inflation.

Appreciation of US unit against some major currencies also pushed the Indian unit down, dealers said, adding, the US currency inched up against the euro and other major currencies and had hit a three-month high against the yen, supported by comments from Federal Reserve Chief Ben Bernanke.

Dealers said the RBI may continue to intervene to cap any sharp downside moves on the rupee, dealers added.

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