Rupee skids to new low of 59.67 as FIIs pull out money

Our Bureau | | Updated on: Mar 12, 2018

The rupee closed at a new life-time low of 59.67 against the dollar on Monday due to heavy capital outflows and dollar demand from oil importers.

Foreign institutional investors (FIIs) have been persistently paring their investments in the equity and debt markets, which is weakening the Indian currency.

BSE-benchmark Sensex ended 233.35 points (1.24 per cent) down at 18,540 points.

On Monday, the rupee opened weaker at 59.63/dollar against the previous close of 59.28 on Friday.

Intra-day, it stayed volatile in the 59.55 to 59.83 per dollar range.

P. Paramasivam, General Manager - Treasury, Corporation Bank, said: “The FII outflows from the equity market today triggered the fall in the rupee. FIIs have been continuously exiting emerging markets on account of US Federal Reserve’s hint that quantitative easing may taper off towards the year end.”

The US Federal Reserve Chairman last week announced that it may ease its monthly bond-buying programme by March 2014.

This has triggered heavy capital outflows from emerging markets, thereby strengthening the dollar.

However, the RBI asking banks to sell dollars to arrest the rupee fall may not be a strong enough measure, dealers said.

CAD to ease

According to Paramasivam, “The current account deficit (CAD) is likely to be at a comfortable level in the June quarter with gold imports slowing down. Also, exports will gather some momentum going by the recent fall in the rupee.”

“Based on the continuing trend of the currency markets, the rupee is likely to trade around 57-58 levels in the month ahead,” he said.

Ashok Gautam, Senior Vice-President and Head Global Markets, Axis Bank, last week said, “Now that the uncertainty over the US monetary easing programme is over, domestic steps such as sustained dollar supply can help the rupee appreciate.”

Govt steps

According to agency reports, Reserve Bank of India Deputy Governor Anand Sinha on Monday said the central bank and the Government are doing whatever is needed to get a “hold over” the deteriorating macroeconomic conditions.

Investors will now watch out for the release of the CAD data due on Friday, which will underline whether the funding pressures for the economy will further rise.

beena.parmar@thehindu.co.in

Published on June 24, 2013
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