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Rupee plunges to record-low close of 61.10 despite RBI steps

By Super

The rupee fell a massive 67 paise to all-time closing low of 61.10 against the dollar despite slew of steps taken by the government and the central bank in the past few weeks to support the battered currency. There was heavy dollar demand from importers, mainly oil refiners, and some banks on behalf of their clients as hopes of a strengthening dollar overseas weighed on sentiment, a forex dealer said. Better than expected US GDP growth has boosted the US dollar. At the Interbank Foreign Exchange Market, the rupee resumed lower at 60.61 a dollar from the previous close of 60.43 and touched a high of 60.58.


As local stocks declined, the rupee continued its downward march and touched a low of 61.17 before closing at an all-time low of 61.10, a fall of 67 paise or 1.11 per cent. The previous record low closing was 60.72 on June 26. However, the rupee touched all-time intra-day low of 61.21 on July 8. "The moves by the government to curb rupee volatility and tame the exchange rate have partly worked," said Ashtosh Raina, head of forex trading at HDFC Bank. "As long as there is no matching demand for the rupee, the dollar will always weigh heavy. That is what we have seen. The current account deficit (CAD) is still a major issue." In another attempt to support the rupee, the Reserve Bank yesterday made it mandatory for foreign institutional investors to obtain the consent of holders of participatory notes and derivative instruments before hedging.

Earlier, the central bank tightened liquidity for banks and took steps to curb speculative activity in forex markets, among others. The S&P BSE Sensex today fell for the eighth day, dropping 153 points, or 0.79 per cent, reversing early gains that came on the back of liberalised FDI norms. FIIs bought shares worth a net USD 46.28 million yesterday. The dollex index, consisting of six global rivals, was up 0.09 per cent. "Today also, RBI intervention was suspected in the forex markets to support rupee," said Pramit Brahmbhatt, CEO of Alpari Financial Services. "Trading range for spot USD/INR pair is expected to be within 60.80-61.50."


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