The Indian rupee Monday breached the 56-mark to reach 56.03 against the dollar on weak global cues and heavy demand for the U.S. currency from banks and importers.
The partially convertible Indian rupee opened at 55.90 against the dollar and breached the 56-mark at 11.20 am (local time), 59 paisa down from its previous close of 55.42 Friday. The rupee last crossed the 55-mark against the dollar June 29.
The rupee fell to its one-week low following weakness in the euro which touched a two-year low against the dollar Monday. The European single currency Monday traded at $1.2225 against the dollar before touching $1.2293. The poor U.S. jobs data and the reduced hopes on the outcome of the euro zone financial leaders meeting in Brussels Monday made the currencies weaker.
If leaders couldn't agree on details, there's little chance that the finance ministers will reach any further agreement, so anyone betting on another positive surprise might be disappointed, said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo, Reuters reported.
However, the weaker rupee is expected to arrest the gold prices in the Indian market. In Mumbai, spot market gold opened at Rs 29,520 per 10 grams.
At 1:20 pm (local time) Monday, the Bombay Stock Exchange's benchmark Sensex was trading in the red at 17,380.34 down by 140.24 points or 0.80 percent while the National Stock Exchange's Nifty was trading at 5,270.10, down 46.85 points or 0.88 percent from their previous close Friday.
CNX Midcap index was down 1.5 percent and BSE Smallcap index was down 1.1 percent. The market breadth was negative with 369 shares advancing against 1037 shares declining on the NSE.
The European markets, which opened in the red, were trading flat Monday, dragged by the weak U.S. monthly job data and concerns over Europe's debt crisis. Asian markets were also trading in loss. Shanghai Composite Index was down by 2.7 percent, Hang Seng tanked nearly 2 percent and Nikkei, Straits Times and Kospi dropped more than 1 percent.