The rupee breached the 67-mark to close at a new two-year low on Monday on expectation that the US Fed will up its policy rate for the first time in nearly a decade at its two-day rate setting committee meeting beginning December 15.

The domestic unit closed at 67.10 to the dollar, down 21 paise over the previous close of 66.89. In the last one week, it has depreciated 37 paise.

The rupee opened 15 paise weaker at 67.04 on Monday, compared to the previous close of 66.89. Intra-day it moved in the 67.125 and 66.957 range.

With risk aversion setting in due to the high possibility of the US Fed rate hike, there was all-round demand for the dollar from market players, including domestic banks and foreign banks on behalf of their clients.

May fall further A senior forex dealer with a public sector bank said the depreciating trend in the rupee is due to the expected hike in interest rates by the US Fed.

This could lead to capital outflows from across the world, including emerging market economies like India, to the US. The rupee may touch 67.40 in Tuesday’s trades, he added.

RBI intervention Market players expect the RBI to actively intervene in the market, both in the spot as well as exchange-traded currency derivative (ETCD) segments, to smoothen volatility in the currency market.

Last week, the RBI in a statement, said it intervenes in the domestic foreign exchange market as and when required in order to manage excess volatility and to maintain orderly conditions.

As a further measure it has been decided to intervene in the ETCD segment, if required. 

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