Rupee down 48 paise against US$

The rupee today closed down by a whopping 48 paise at 55.42 against dollar amid spurt in demand for the US currency after Fitch's downgrade of Spain worsened the eurozone crisis.

Written by Agencies | Mumbai | Published: June 8, 2012 9:05 pm

The rupee today closed down by a whopping 48 paise at 55.42 against dollar amid spurt in demand for the US currency after Fitch’s downgrade of Spain worsened the eurozone crisis.

The domestic currency,however,managed to log its first gain in 10 weeks,breaking the trend of nine consecutive weekly losses,the worst streak since the Lehman crisis in 2008. Last Friday,rupee had closed at 55.54,after touching a record low of 56.52 against dollar a day earlier.

At the Interbank Foreign Exchange (Forex) market,rupee resumed lower at 55.18 against yesterday’s close of 54.94. A smart rise in dollar overseas pushed the rupee to a day’s low of 55.67.

While the rupee attempted to stage a late recovery by hitting 55.14 as local stocks saw fund inflows of Rs 200 crore today,the move was in vain. It finally concluded at 55.42,a fall of 48 paise or 0.87 per cent.

Forex dealers said with US Fed chief Ben Bernanke stopping short of mentioning a fresh stimulus and Fitch downgrading Spain’s long-term credit rating,investors flocked to the US dollar,considered a safe-haven asset.

“The rupee remained weak throughout the day on weakening global currencies on return of global risk aversion due to disappointment from Fed over additional QE infusion. The downgrade of Spain by Fitch also weighed on it,” said Pramit Brahmbhatt,CEO,Alpari Financial Services (India).

The euro today fell after the three-notch Spanish downgrade and signs of weakness in Italian and German economies. The euro fell 0.8 per cent to a low of USD 1.24,retreating from a two-week high of 1.26 hit yesterday.

The dollar index was also up by nearly 0.65 per cent against a basket of currencies.

The sentiment favoured the dollar against rupee as the surprise rate cut announced by China yesterday was interpreted as a sign of faster-than-expected slowing down of the economy,said a Mumbai-based treasury head of a public sector bank.

Meanwhile,the BSE Sensex recovered its initial losses and closed higher by 69.82 points.

Experts feel the rupee is reflecting the crisis emerging in the debt-ridden Eurozone area.

“The immediate trigger for the rupee to fall today was the downgrade of Spain by Fitch yesterday. I feel the pressure on the rupee is not over,as we don’t have any indication of an immediate resolution to Eurozone crisis,” said Union Bank of India Treasury Head VJ Mhatre.

If the Eurozone breaks up,the rupee will see further downward pressure and will cross 57 against dollar,he added.

With the next week being data-heavy,Standard Chartered Treasury Head Anantha Narayan said the market seems to be a bit too volatile.

“The coming week will see IIP and inflation numbers while globally,there is the Greece re-polls and the FOMC meeting in the US. The most important for the market is the June 18 policy review by the RBI. So,my view is that till there is some clarity from these events,the pressure on the rupee will continue and it will be volatile,” Narayan added.

The premium for the forward dollar declined further on sustained receivings by exporters.

The benchmark six-month forward dollar premium payable in November fell further to 147-149 paise from yesterday’s close of 149-151 paise. The far-forward contracts maturing in May also moved down to 270-272 paise from 275-277 paise.

The RBI fixed the reference rate for the US dollar at 55.3640 and for euro at 69.2125.

The rupee fell back against the pound sterling to end at 85.50 from overnight close of 85.43 and also turned negative against the Japanese yen to settle at 69.89 per 100 yen from 69.24.

It however,improved slightly to 69.05 per euro from 69.11 previously.

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