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The rupee fell 90 paise to close at an all-time low of 58.77 against the dollar on Tuesday amidst heavy capital outflows, dollar demand from oil importers and banks, and worry over scaling back by the US Federal Reserve of monetary stimulus.
The rupee opened lower at 58.23 from Monday’s close of 57.87 on weak equity market and persistent capital outflows.
“The first four months of 2014 saw over $3.6 billion of inflows in the Indian debt segment and between May and June till date, over $3.5 billion has moved out. Such a sharp outflow within such a short period continues to pressure the rupee,” Anindya Banerjee, currency analyst, Kotak Securities.
Intra-day, the rupee moved in the range of 58.22 and 58.80 per dollar. The BSE-benchmark Sensex ended down 102 points (0.53 per cent) at 19,223 points. With the May trade deficit numbers rising to a seven-month high, concern over India’s current account deficit widening further has increased.
The rupee is expected to remain vulnerable ahead of the outcome of the US Federal Reserve's two-day meeting on monetary policy starting Tuesday. The US Fed had hinted at scaling down its quantitative easing programme, and this is likely to trigger outflows from India thereby putting pressure on the rupee.
The RBI has cautioned that shifts in global market sentiment can trigger a sudden stop or a reversal of capital from across emerging economies.
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