Unable to sustain the recovery seen in the past two trading sessions, the rupee on Monday weakened 30 paise to 66 against the dollar after the Purchasing Managers’ Index (PMI) data showed that Indian factory activity shrank for the first time in more than four years last month.
The Indian currency had gained 310 paise or 4.5% in the past two trading sessions to 65.70 against the dollar on Friday after the Reserve Bank of India (RBI) eased pressure in the currency market by providing a special window for state-run oil refiners to buy foreign exchange.
“The rupee lost momentum after release of weak manufacturing PMI numbers which came at its lowest level in more than four years,” said Jayant Manglik, president of retail distribution, Religare Securities. “In the short run, weakness in the rupee is expected to prevail and we might see it depreciating towards the 67 level.”
Data released on Monday showed that PMI fell to 48.5 in August, lower than 50.1 in July.
The rupee commenced weak at 66.15 to a dollar from the previous close of 65.70 and then climbed to a high of 65.68. The rupee then turned negative and dropped to a low of 66.30 before recovering some ground to end at 66, a fall of 0.46%.
Experts expect the rupee to remain weak in the near future. The rupee has depreciated around 16% since May and has fared worse than other emerging market currencies that have been hit since the US Federal Reserve first hinted that it was considering tapering off its bond-buying stimulus programme called quantitative easing or QE3 on a strengthening American economy.