Indian Rupee Drops due to Year-End Dollar Buying

The Indian rupee dropped today for the fourth straight session. Market analysts speculated that the currency dropped as importers were buying dollars to pay for their bills by the end of the year.

It is not uncommon for the Forex market to react to the year-end by wild swings as companies buy currencies to fulfill their payment obligations. At the same time, thin trading volume due to the holiday season calms volatility as liquidity is low. Nevertheless, today’s drop of the rupee was not small and added to the 2.8 percent decline over the past three weeks that followed speculations about monetary tightening from the Federal Reserve.

USD/INR advanced from 63.5400 to 63.6705 as of 12:16 GMT today.

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