The rupeeon Wednesday continued its free fall, plunging to 64.54 against the dollar for the first time ever before recovering some ground to end at 64.11, still down a staggering 86 paise to a fresh closing low.

The currency’s slide continued amid steps by the Reserve Bank of India (RBI) yesterday to increase availability of cash in the banking system. Heavy dollar demand from importers, continued capital outflows and expectations the US Federal Reserve would start withdrawing its bond-buying programme next month also weighed on the currency.

At the interbank foreign exchange market, the rupee opened lower at 63.45 a dollar from the previous close of 63.25 and touched the day’s high of 63.10 on an initial rally in local stocks.

It later fell sharply to a lifetime intra-day low of 64.5450 before recovering some ground on likely RBI intervention to settle at 64.11, a fall of 86 paise or 1.36 per cent. In five straight sessions, the currency has lost 292 paise or 4.77 per cent.

“Despite the slew of measures taken by the RBI, rupee is seen giving a muted reaction to the same and going on with its weak trend,” said Abhishek Goenka, founder & CEO of India Forex Advisors. “Today’s FOMC (Federal Open Market Committee) minutes will be very important for the currency markets.”

The benchmark S&P BSE Sensex today plunged by over 340 points or 1.86 per cent, extending losses for the fourth straight session, while FIIs pulled out a net $214.14 million from equities, as per SEBI data.

The dollar index was trading higher by 0.15 per cent against its major rivals ahead of US Federal Reserve meeting minutes that may shed more light about the timing of an expected reduction in monetary stimulus.

(This article was published on August 21, 2013)
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