MUMBAI: The Indian rupee posted its biggest single-day fall in a week on Wednesday, hurt by heavy dollar buying by importers, particularly in the oil sector, and weakness in the euro.
The rupee fell for the twelfth session in fourteen, taking its losses to 5.2 percent since the start of May and becoming the worst performer in Asia over this period.
The falls came a day after the rupee had posted a rare session of gains in recent days when the currency benefited from the central bank's restrictions for certain imports of gold and on news that India could raise the cap on foreign investment in government debt by $5 billion.
Still, analysts said concerns about the current account deficit and the prospect that the Reserve Bank of India may decide against cutting interest rates later this month should weigh on the rupee.
"The undertone for the rupee continues to remain bearish," said Param Sarma, chief executive officer at NSP Forex.
"I do not expect the central bank to intervene much to protect the rupee either, so it is only a matter of time that we will see the previous record low. Whether it goes past that, we will have to wait and watch," he added.
The partially convertible rupee closed at 56.7250/7350 per dollar, compared with 56.44-45 on Tuesday.
Traders said there was continuous demand for the greenback from oil importers, the biggest buyers of dollars in the domestic currency market, in the second half of the session, pushing the rupee lower.
The euro was trading at $1.3068, off the session high of $1.3106 and weaker than its previous close of $1.3078.
The rupee had risen to as high as 56.31 in morning trade, its strongest since May 30. Choppy domestic shares also failed to provide much direction.
In the offshore non-deliverable forwards, the one-month contract was at 57.06 while the three-month was at 57.65.
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 56.97 with a total traded volume of $5 billion.
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