Persistent month-end demand for dollars saw the rupee close a tad weaker at 59.77 to the dollar against the previous close of 59.73. The domestic unit opened stronger at 59.50 on Tuesday due to positive sentiment in the equity market and the measures taken by the Reserve Bank of India to stabilise the currency.
However, month-end dollar demand from oil importers and Defence related payments weighed on the currency, said a dealer with a public sector bank. After opening stronger, the rupee slid continuously and touched a low of 59.86 during the day. Amid fears of it nearing the 60-level mark again, intervention by the RBI gave it some support.
“The rupee is likely to remain in the depreciating mode in the short run. However, the RBI measures will gradually help the rupee and it may strengthen back to 58 levels within a month’s time,” the dealer said.
According to a Bank of America Merrill Lynch report, unless the RBI raises NRI or sovereign bonds, the rupee will likely breach 65 per dollar in 2014, as it can, at most, sell $30 billion to defend the currency.