The Rupee weakened by about 34 paise at Rs 42.44/46 per US dollar on Wednesday, making it costlier for the travellers and students going abroad.
At the same time, the remittances from those working abroad would fetch more money now, than it did a couple of weeks back when the rupee hovered around Rs 40 against dollar. Rupee weakened against the dollar by 6.52 per cent from April 10, 2008 when it closed at Rs 39.84 against a dollar.
On the corporate front, the weakening rupee will help exporters to fetch more bucks for the same unit of exports. No wonder, the market has given a thumps up for the information technology stocks on Wednesday by taking the IT sector index on Bombay Stock Exchange up by 3.8 per cent to 4,256 points. On the contrary, imports will become costlier to the extent of weakness in the domestic currency.
Mostly the weakness in the rupee arose from the spiralling global crude prices, and the need for the oil companies to buy dollars to meet their import commitments. The recent domestic data on index of industrial production (IIP for March falling to 3 per cent), rising prices and Tuesday’s terror blasts in Rajasthan have also weighed heavily on the domestic currency, according to a treasury official with Corporation Bank.
Due to rising crude prices and growing demand for fuels, the monthly commitments towards fuel imports seems to have doubled over the last one year or so, according to another public sector bank official.
Dollar gained against several currencies, along with that of rupee, on the positive data coming from retail consumption figures in the US. During the day, rupee touched a low of Rs 42.65 against the dollar before recovering about 20 paise before close.
"The rupee is expected to reel under weakness for a week at least, before the crude prices subside in global markets," said P Mukherjee, President-Treasury of Axis Bank.
Foreign Institutional Investors (FIIs), who participate in the stock market, also contributed to the weakness in the rupee. Their net sales during the last trading sessions ending May 13 was at Rs 712 crore.