For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

Rupee is back to its falling ways

|
 Rupee is back to its falling ways
On Tuesday the rupee closed at levels last seen on Sept 10, 2013, after having endured a miserable August and first few days of September.
 

At one stage earlier this month the rupee looked set to strengthen to the 60 levels. But now it looks set to weaken to the 64 levels. The currency closed at 63.70 on Tuesday.

Fears of QE tapering is back to haunt the markets. On Friday, the US jobs data was rather robust which clearly signalled that tapering could begin later this year, rather then next year.

There are also reports that the oil marketing companies have returned to the forex markets. It maybe recalled that the RBI had opened a special window to meet the dollar requirement of banks. With the window set close by the end of the month, there could be sudden demand from oil companies.

Even if the Fed announces its tapering in December, the RBI would be prepared to battle the rupee, if there are dollar outflows, particularly from foreign funds.

This is because the RBI has already received around $16 billion from the dollar swap facility it had offered banks. This amount could well be used in the forex market for intervention to prevent a slide in the rupee.

Meanwhile, data suggests that there is very little to support the rupee. Foreign fund inflows into the stock markets seemed to have considerably reduced, as gauged by the net FII inflow into the cash markets. On the other hand weak IIP data and surging retail inflation increase the worry for the rupee.

Bond yields have started rising and bond prices dropping, which should affect banks. Some banking stocks like Yes Bank, Axis Bank and ICICI Bank have already reacted sharply in the last few days, due to the falling bond prices.

GoodReturns.in

Read more about: dollar currency
Story first published: Wednesday, November 13, 2013, 8:51 [IST]
Company Search
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more