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The rupee continued its slide to touch 63.89 against the dollar before closing at 63.62 on Wednesday. Capital outflows and dollar demand continued to weigh on the domestic unit.
The unit dropped to a 1-year low on Tuesday to breach 63 levels closing at 63.54 per dollar. On Wednesday, the rupee opened weaker at 63.73 on continued negative sentiments amid heavy capital outflows from the domestic equity markets.
This weakened the rupee to 63.89 per dollar at the Interbank Foreign Exchange market. Dealers claimed the RBI intervened at these levels to limit further fall in the rupee beyond 64 levels.
Also, there was some support to Asian currencies as the Russian currency Ruble depreciated at a slower pace against the dollar.
This helped the rupee recover to 63.48 after which dollar demand from importers due to lower oil prices put pressure on the rupee.
The rupee slide may continue in the short term amid weak growth concerns and interest rate hike cycle globally resulting in forex outflows.
Call Rates, G-sec yields stabilise
Amid high liquidity, the overnight call money rates, the interest rates at which banks borrow from each other to overcome liquidity mismatches, closed flat from Tuesday’s close of 8.50 per cent. Intra-day, it moved in the range of 7.80 per cent and 9.15 per cent.
The yields on the 10-year benchmark government security (8.40 per cent G-Sec, maturing in 2024) yield softened to 7.96 per cent from a close of 7.98 per cent on Tuesday. The prices rose a tad to Rs 102.84 from Rs 102.72.
Experts say the rupee may continue to trade with a downward bias towards 64 to 64.30 levels in the near term. As more central banks may join the US central bank in its rate hike cycle, there is an expectation that it would result in forex outflows.
Forex dealers said besides the dollar’s gains against other currencies overseas, heavy demand from oil importers for the American currency and a weak opening in the domestic stock market continued to put pressure on the rupee.
The domestic unit had plummeted to 13-month low of 63.54 by falling 60 paise against the dollar in yesterday’s trade due to heavy demand for the US currency from importers and some banks amid falling oil prices and chaos in stock markets.
Meanwhile, the benchmark BSE Sensex was trading down by 55.51 points or 0.21 per cent at 26,725.93
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