Continuing with its recent downward bias, rupee depreciated 34 paise to 65.34, to hit fresh two-year low against the US dollar in trade today.
The domestic currency had snapped a seven-day losing streak, settling 10 paise higher at 65 against the greenback on Friday amid fresh selling of the US currency by banks and exporters on hopes of resumption of foreign capital inflows into equity markets.
But the local unit failed carry on with the momentum on Monday due to unsupportive economic data. Figures showed that merchandise exports contracted for the eighth month running in July, registering a 10.3 per cent drop over last year.
The trade deficit widened to $12.8 billion in July from $10.8 billion in June, while mports fell 10.3 per cent to $35.95 billion while exports came in at $23.1 billion.
An ET poll of 16 market participants shows that the rupee-dollar pair may slide to 66.50, with more than half of them believing the pair would trade in the range of 65-65.60 till December this year.
The decline may be due to external factors such as China’s devaluation or the US rate hike and the rupee’s overvaluation. A cheap currency evinces global investor interest.
Dollar index, which tracks the movement of dollar against a trade-weighted basket of six major world currencies, stood at 96.69, up 0.2 per cent.