Rupee’s free fall continues, loses 45 paise

PTI Mumbai | Updated on May 03, 2012


Continuing its steady fall, the rupee approached close to 54-level against the dollar intra-day but recouped on suspected RBI intervention before ending the day at four-and-a-half month low of 53.41/42, a hefty loss of 45 paise.

At the interbank foreign exchange market, the domestic currency had plunged to an intra-day low of 53.47 on sustained dollar demand from importers amid weak equities.

Dealers said the rupee remained bearish due to a slew of reasons and could have declined to sub-54 levels but for Reserve Bank’s intervention. RBI is believed to have asked banks to improve dollar supply. They added that the rupee would touch 54 level in near term.

However, RBI’s intervention in the forex market could not be verified independently.

At the fag end rupee managed to pull back from the day’s lows but still ended at 53.41/42, a steep fall of 45 paise.

Previously, the rupee had closed at 53.64/65 on December 15, 2011. In straight three trading sessions of fall, the rupee has depreciated by 87 paise, or 1.66 per cent.

“Due to the continuing structural issues like higher current account deficit, high trade deficit along with concerns relating to GAAR (General Anti Avoidance Rule) provisions, rupee has shown weakness in the recent time,” Mr N S Venkatesh, the Head of Treasury, IDBI Bank, said.

In the near-term, this weakness is likely to continue till capital inflows come back to Indian market, he added.

Indian Overseas Bank General Manager (Treasury) Mr T S Srinivasan said, “Today’s rupee movement showed inherent weakness in the currency. I expect rupee to touch Rs 54 per dollar in the near—term as weakness in the domestic currency continues due to structural issues faced by the country.”

“I expect some sort of cosmetic intervention by RBI tomorrow otherwise sentiment will go for a toss.”

Published on May 03, 2012

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