* Rupee ends at 63.37/38 per dlr vs 62.83/84 on Monday
* Good dlr sales by custodian banks pull rupee off day's
* Fed policy decision to be announced late on Wed key
By Swati Bhat
MUMBAI, Sept 17 (Reuters) - The Indian rupee saw its
steepest fall in two weeks on Tuesday as investors preferred to
take profits on their long rupee positions ahead of the U.S.
Federal Reserve's two-day policy meeting outcome due to be
released on Wednesday.
Although the anticipated trimming of the Fed's massive bond
purchases has caused some apprehension, markets expect a much
longer road to rate hikes after former Treasury secretary
Lawrence Summers dropped out of the race to become its next
The outcome of the Fed's meeting will be a key determinant
of what the Reserve Bank of India chooses to do at its monetary
policy review on Friday.
With growth languishing at a decade-low and inflation
remaining sticky, the new central bank governor will have a
tough task at hand.
"There was profit taking seen today ahead of the FOMC but
good dollar selling by custodian banks helped," said Vikas Babu
Chittiprolu, a senior foreign exchange dealer with Andhra Bank.
"I expect the Fed to taper by a maximum of $15 billion and
that is already discounted by the market. I see the rupee rising
to 61 to a dollar by end-September as hopes from Rajan are
high," he added, predicting a range of 62.50 to 64.20 until the
policy on Friday.
The partially convertible rupee closed at 63.37/38
per dollar compared with 62.83/84 on Monday. The unit dropped
0.85 percent on the day, its biggest single-day fall in two
weeks. It moved in a wide range of 62.95 to 63.6450 during the
Traders said despite the stock market having been choppy the
dollar sales seen from custodian banks helped pull the rupee off
the day's lows.
India's benchmark share index rose on Tuesday, although on
its lowest volume in nearly 1-1/2 months, led by gains in
technology shares that were aided by a weak rupee and attractive
short-term valuations due to the recent underperformance of the
Most other Asian currencies also weakened versus the dollar.
In the offshore non-deliverable forwards, the
one-month contract was at 64.04 while the three-month was at
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 at
around 63.46 with a total traded volume of $2.72 billion.
(Editing by Anupama Dwivedi)