Re sinks below 60-mark, ends at historic low of 60.71 vs USD
The rupee today tanked by a massive 106 paise to close at all-time low of 60.71 against dollar on heavy capital outflows and month-end dollar demand from importers, even as RBI intervened to stem the currency slide.business Updated: Jun 26, 2013 22:36 IST
The rupee on Wednesday tanked by a massive 106 paise to close at all-time low of 60.71 against dollar on heavy capital outflows and month-end dollar demand from importers, even as RBI intervened to stem the currency slide.
The rupee resumed lower at 59.74 a dollar from overnight close of 59.66 at the Interbank Foreign Exchange (Forex) market and immediately touched a high of 59.72.
As dollar demand surged, rupee continued to reel under pressure and touched an all-time intra-trade low of 60.76 and finally ended at 60.72, a steep fall of 106 paise or 1.78%. On June 10, 2013, it had tumbled by 109 paise (1.91%).
FIIs pulled out nearly Rs 550 crore from stocks today, taking the June outflows to about Rs 9,000 crore. In debt segment, they have pulled out Rs 27,850.20 crore till June 25.
"RBI was seen (intervening) at 59.90 level during early trade and the rupee was trading in 5-10 paisa range. But, the moment, rupee touched 60, stop-loss was triggered, which led to sharp fall of the rupee," said Hemal Doshi, Chief Currency Strategist, Geojit Comtrade.
Unless measures are announced by the government and the RBI, rupee may see 62-62.50 level in the near-term, he added.
Dollar index of six major global rivals was up by 0.24% supported by data underscoring US Fed's view of an improving economy and a likely slowdown in monetary stimulus.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "Rupee had a free fall today...Dollar index traded strong against other major rivals and traded at 3-week high.
Trading range for spot rupee is expected to be 60.30 - 61.10."
The over 7% slump in rupee in June has triggered fresh set of worries. "A weaker INR can add to inflationary pressure, widen fiscal deficit and slow capital inflows, without having a positive effect on CAD. Rapid depreciation also affects business sentiment negatively," said Standard Chartered in a report.
Meanwhile, the Indian benchmark S&P BSE Sensex today dropped by over 77 points.
The rupee, which is the second worst hit among the major emerging market currencies after the South African rand as the US dollar has been rallying to historic highs, has lost nearly 12% since May and 7% in June itself.
According to traders, the RBI sold dollars more than once in the day through state-run banks as soon as the rupee was trading at 59.985-mark, which was the previous all-time intra-day low recorded on June 20. But the efforts seem to have had little impact on traders who have been bearish on the unit for quite some time, said a forex expert.
NS Venkatesh, Treasury Head, IDBI Bank said: "Sharp movement in rupee was due to short-covering after the domestic currency touched 60 level. I think, rupee would remain under pressure in the near-term till flows come back."
With the economic logic for overseas funds to invest in Indian fast vanishing as rupee weakens and the US treasury yield rises, outflows are expected to continue.
"Slump in the rupee is majorly attributed to the huge outflows from the debt market in the current month. Rupee is also seen quite vulnerable to the global factors since last one month," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Going ahead, if rupee sustains above 60 levels against the dollar on a closing basis, then there is a possibility that it might hit the next technical key level of 61 soon, experts said.
Meanwhile, premium for forward dollar closed slightly lower on fresh receipts by exporters. Benchmark six-month forward dollar premium payable in November softened to 152-1/2-154 paise from Monday's close of 153-155 paise.
Far-forward contracts maturing in May also declined to 313-315 paise from 315-1/2-317-1/2 paise.
The RBI fixed the reference rate for the US dollar at 59.8538 and for the euro at 78.2265.
Rupee continued its downslide against the pound sterling to 93.21 from previous close of 92.29 and also dipped further against the Japanese yen to 62.09 per 100 yen from 61.28.
It also dropped against the euro to 79.05 from last close of 78.34.