Re drops to record low of 61.21, recovers after RBI steps in

Mumbai, PTI | Updated : 08 July 2013, 07:19 PM

The rupee dived to a record low of 61.21 against the dollar on Monday after better-than-expected US jobs data raised concerns about the US Fed easing its stimulus programme but the currency regained some lost ground to close at 60.61 after the RBI intervened.

The rupee opened at 60.95 a dollar compared with Friday's close of 60.22 and dipped to 61.21, past its previous all-time low of 60.76 on June 26. Local shares were sluggish amid sustained dollar demand from importers, mainly oil refiners.

The rupee bounced back after the Reserve Bank of India (RBI) intervened through public sector banks, reaching a high of 60.58 before settling at 60.61, still a fall of 39 paise, or 0.65 per cent, the second straight day of losses.

"After US non-farm payrolls data, rupee was expected to open with steep losses. However, RBI was seen selling dollars which helped the local currency recover," said the forex head of a leading private bank.

A falling rupee has a cascading effect on inflation as imports like oil become costlier, widens the current account deficit (CAD) and increases the risk of capital outflows.

"Expect spot rupee to trade over 62 levels in coming days," said Pramit Brahmbhatt, CEO, Alpari Financial Services.

The benchmark S&P BSE Sensex today fell 171.05 points, or 0.88 per cent, while FIIs sold shares worth Rs 204.46 crore, as per provisional data with the BSE.

The dollar index, which was trading at a nearly three-year high, was down by 0.09 per cent against a basket of six major currencies.

"The US dollar index was trading at its three-year high and the euro was sustaining near USD 1.2850 levels, which was making a strong case for the rupee weakness," said Abhishek Goenka, Founder & CEO of India Forex Advisors.

On Friday night, data showed that US non-farm payrolls for June saw an addition of better-than-expected 195,000 jobs. This fuelled speculation that Fed will announce tapering of its stimulus as early as July, said traders. Rupee has depreciated over 13.50 per cet in past nine weeks.

First Published: Monday, July 08, 2013 09:38 AM
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