The Hindu Business Line : Rupee breaches 45-mark on strong dollar purchases

It crossed the psychologically important level of 45 to the dollar, on account of largescale dollar buying by gold and oil importers. There was a huge demand-supply mismatch as inflows were insufficient, said forex dealers.

The domestic currency opened weaker at 44.92/94, but strengthened to 44.87. It then depreciated to 45.17 before recovering marginally to close at 45.10/11, against the previous close of 44.84.

The RBI did intervene, but only to keep volatility in check and not support the rupee, said the treasury head with a private sector bank. There was also dollar demand from foreign banks buying the greenback to profit from the arbitrage between the spot and the non-deliverable forward rates, said a forex dealer.

Tour packages ‘costlier’

The dollar’s strengthening against other currencies also adversely affected the rupee.

Tour packages will now become costlier. Besides, the ground contracting with foreign partners is done in dollars, said Mr Vishal Suri, COO, Leisure Outbound, Thomas Cook India Ltd.

“In totality, we don’t see much of an impact. We have taken the auction contract for a very large value insulating our position. Also, the rupee is not depreciating against the euro and the pound,” said a senior official at a leading IT company.

According to the RBI reference rate, the rupee appreciated from Rs 84.01 on August 1 to Rs 79.6 against the pound, and from Rs 65.46 to Rs 63.8 against the Euro in the corresponding period. According to dealers, the rupee is likely to consolidate around these levels.

The rupee is in its last phase of depreciation, according to Mr Ravi Pai, Executive Vice-President and Head, Forex, Derivatives and Treasury, HDFC.