The rupee today came precariously close to 54 levels but recouped day’s most of the losses to end at 53.47/48,down six paise against the US currency,after RBI’s suspected intervention in forex market.
The domestic unit opened sharply lower at 53.65/66 and further plunged to 53.92 amid sluggish equities and fears of more capital outflows after reports that government is reviewing taxation treaty tax-heaven Mauritius.
However,suspected strong intervention by the Reserve Bank at day’s lower levels forced exporters to cover their short positions. It helped the rupee rebound to a high of 53.4350 before ending at 53.47/48,a fall of six paise.
However,RBI’s intervention in the forex market could not be verified independently.
Central Bank of India Deputy General Manager (Treasury) K Eshwar said,”Rupee is likely to be in the current range in the near-term as the weakness continues due to structural issues.”
“Though RBI is intervening time to time in the market,it will be difficult for the central bank to intervene frequently as borrowing through repo rate is still above its comfort level,” he said.
Meanwhile,Finance Minister Pranab Mukherjee in Manila blamed volatility in global commodity prices for currency depreciation and said deteriorating balance of payment (BoP) situation in several Asian countries also put stress on currencies.
“In several Asian countries,excepting China,the BoP is under stress which leads to currency depreciation,” Mukherjee told reporters.
After dropping by nearly 151 points yesterday,the BSE benchmark Sensex today stumbled by 320.11 points or 1.87 per cent,which mainly kept the rupee under pressure.
The dollar index was up by over 0.1 per cent against a basket of currencies while New York crude oil was trading just above USD 101 a barrel in European market today.
Indian Overseas Bank General Manager (Treasury) T S Srinivasan said,”It seems,the RBI heavily intervened today to ensure that rupee doesn’t close below the previous day’s level. This kind of technical intervention is usually done by the central bank to check further weakening of the currency.”
He also said though the fundamentals remain weak for the rupee,it may test Rs 52.50 level per dollar next week depending on the opening on Monday.
Pramit Brahmbhatt,CEO,Alpari India said,”Huge oil importers demand and FII outflows kept the INR on its front foot but the RBI speculation aided to recover the lost ground.
The markets have also been in oversold zone and active buying has intensified late rise in rupee.”
The rupee premium for the forward dollar declined further on sustained receivings by exporters.
The benchmark six-month forward dollar premium payable in October declined to 170-172 paise from 173-175 paise and maturing in April also dropped to 301-303 paise from 309-311 paise previously.
The RBI fixed the reference rate for the US dollar at 53.7225 and for euro at 70.6465.
The rupee moved down further to against the pound sterling to 86.47/49 from last close of 86.40/42 and also remained weak against the euro to Rs 70.21/23 from Rs 70.12/14. It too softened against the Japanese yen to 66.64/66 per 100 yen from 66.51/53.