The Indian rupee fell to their lowest in three months on Wednesday, erasing all intraday gains as traders bet on a much more cautious central bank now that it has delivered a bigger-than-expected rate cut. Lingering concerns over India's widening current account deficit (CAD) and its high fiscal deficit was particularly seen hurting the rupee's ability to gain vis-a-vis the dollar, traders said.
The rupee closed at 51.78/79 to the dollar from Tuesday's close of 51.48, marking its lowest level since January 16.
Traders said the rupee looked set to fall further and are eyeing initial support at 52.12, the 61.8 percent retracement of the December-February gains.
The one-month offshore non-deliverable forward contracts were at 51.78.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and on the United Stock Exchange all ended around 51.90, on a total volume of $3.64 billion.
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