The rupee today closed at all-time low of 53.96 against dollar amid rising inflation and risk aversion by global investors who bet on the US currency as a safe haven in view of fresh euro-zone worries.
Forex dealers said intense dollar demand from banks and importers,mainly oil refiners,in view of higher dollar overseas affected the rupee value against the dollar,despite RBI steps last week to stem the fall of the local unit.
The Inter-bank Foreign Exchange market was abuzz with speculation of Reserve Bank intervention. When contacted,T S Srinivasan,GM (Treasury) of Indian Overseas Bank said,the central bank was believed to have intervened initially in the market today.
“Announcement of open market operation (OMO) today by the RBI indicates that it will intervene in the market in the near future. I think it is likely to intervene tomorrow,” he added.
IDBI Bank Treasury Head N S Venkatesh said the rupee slide was mainly due to continuing uncertainty in the euro-zone,which prompted strengthening of dollar against the euro. “Also,risk aversion mode is another contributing factor for the fall,” he added.
The rupee resumed lower and dropped further to end at all-time closing low of 53.96 per dollar,showing a loss of 33 paise after inflation rising to 7.23 per cent in April dampened investor sentiment.
Srinivasan said,”Fundamentals continue to be bad for the domestic currency. Also,inflation data further dampened the sentiment.”
Euro fell to 1.2868 from 1.2925 late Friday in New York.
he dollar rose to 80.05 yen from 79.90.
In London,Sterling hit a three-week low against the dollar today as political deadlock in Greece curbed investor appetite for risk and fed safe-haven demand for the greenback.
Meanwhile,the BSE benchmark index Sensex today lost 77 points to end at 16,215.84.
Falling global equity markets has weighed on a well supplied crude oil market along with rising dollar index which made it expensive in home currency,” he added.
The rupee premium for the forward dollar closed higher on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in October ended up at 158-160 paise from last weekend’s level of 156-158 paise and far-farward contracts maturing in April also finished higher at 270-272 paise from 267-269 paise previously.
The RBI fixed the reference rate for the US dollar at 53.7118 and for euro at 69.2260.
The rupee declined further to 86.72/74 against the pound sterling from last Friday’s close of 86.40/42 and also moved down against the euro to 69.44/46 from 69.38/40. It too remained weak against the Japanese yen to 67.62/64 per 100 yen from last close of 67.10/12.