The Indian rupee hit a record low of 57.32 against the US $ for a second consecutive session on Friday and posted its worst weekly fall in nine-months, on strong dollar demand from oil importers, increased capital outflows and slowdown concerns.
Traders said the Reserve Bank of India stepped in to prop up the currency and prevent a much sharper fall.
“Lack of monetary easing from the US Fed has triggered a run for the US sollar and selling in equities and commodities globally,” said Anindya Banerjee, senior manager, currency derivatives, Kotak Securities. “Markets will keep a close eye on the next week’s EU summit in which leaders are expected to discuss measures to combat the crisis. In case concrete measures are not announced, it can cause further sell-off in risk assets and rally in the US dollar.”
After opening lower at 56.80 and touching 57.32 against the dollar during the day, the partially convertible rupee ended the day at 57.12 per dollar, a fall of more than 1.4%, against Thursday’s close of 56.30.
Analysts expect the rupee to continue its falling streak in the near-term. “58.50 may not be seen in the next one week or so, but the current rally has the momentum to take it there,” said Rajeev Mahrotri, head of trading at IndusInd Bank.