The Hindu Business Line : Rupee under pressure

The reasons for the depreciation of the rupee include the high cost of oil and lack of dollar supply in the spot market, according to Mr Ajay Banerjee, General Manager, Bank of Maharashtra. “I expect the rupee to hover around 42 levels for the next two to three months till oil prices come down,” he said. Some forex dealers said that the rupee may touch 43 in the next two to three days, given the total lack of dollar supply in the spot market. According to a Gol dman Sachs report, released today, the weak industrial production continued to put depreciating pressures on the rupee. The report said, “The rupee has depreciated by 3.7 per cent since May 1 when the Reserve Bank of India Governor came out with a statement saying that they will not be using the exchange rate to control inflation. Inflationary risks and growth moderation will continue to weigh on capital inflows in the near term. Accelerating oil prices are increasing the current account deficit and putting pressure on the rupee.” In the overseas market, the dollar appreciated against the Swiss franc and yen and even against the euro. In the forwards market, the six-month premia closed at 1.59 per cent (1.21 per cent) and the 12-month at 1.32 per cent (1.11 per cent).

— Our Bureau

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