Re falls most in 2 months

The rupee reaches its lowest level in two months to close at Rs 39.35/36 against the US dollar, reports Gaurav Choudhury.

The rupee reached its lowest level in two months on Wednesday to close at Rs 39.35/36 against the US dollar, but foreign exchange traders felt the currency could continue to rise in the medium term.

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Officials and market analysts, however, felt that the Reserve Bank of India (RBI) was likely to maintain status quo on the overall interest-rate regime, but could engage in more “active management” of foreign inflows in the short-term to prevent appreciation of the domestic currency beyond a certain limit. The trend has already been visible in the past few months. The RBI’s purchases of the dollar have increased from $4.42 billion in May to $11.4 billion in July this year. During the first eight months of the current calendar year, the apex bank has purchased $39.9 billion.