After three days of relief rally,the rupee today came under pressure touching a low of 55.88 on heavy month-end dollar buying by oil companies amid the US dollar gaining strength globally but RBI intervention helped the domestic currency finally close 49 paise lower at 55.67.
At the Interbank Foreign Exchange (Forex) market,the domestic unit opened weak at 55.36 and gradually moved downwards to the day’s low of 55.88 as dollar demand emerged.
It finally closed at 55.67,down 49 paise over yesterday’s close of 55.18.
Sentiments were weighed down as the US dollar turned higher against its major counterparts today as fears over Spanish banks intensified. During European afternoon trade,the dollar approached an almost two-year high against the
“The rupee was actually losing strength despite the three day gains on paper. Today,we saw sustained month-end dollar demand from oil importers and that pulled it down towards the 56-level once again,” said treasury head of a state-run bank.
However,there was intervention from the RBI at Rs 55.88 or Rs 55.85 level today,which helped the currency to recoup around 20 paisa in the end,said Hemal Doshi,Chief Currency Strategist,Geojit Comtrade.
The dollar index,indicator of six major currencies,trading higher and New York crude oil trading above USD 91 a barrel in European market today.
The rupee had gained over 82 paise in the last three sessions. It has fallen over 11 per cent since early March driven by a combination of deteriorating global risk sentiment
and weak domestic fundamentals.
Meanwhile,the Indian benchmark Sensex closed only 22 points points at closing. According to Pramit Brahmbhatt,CEO,Alpari Financial Services (India),the recent Greece pre-poll results were appealing for return of risk appetite but the rising cost of debt in Spain weighed on global markets.
“The Indian markets which were running high on the petrol price hike and retreat in dollar index tanked in intraday gains towards the end today,” he said.
T S Srinivasan,GM (Treasury),Indian Overseas Bank,feels that while today’s fall in rupee was a month-end phenomenon,nothing has fundamentally changed for the currency and the bearishness continues.
Going ahead,closing of rupee on Friday will determine the direction of the currency in the near-term,he added.
“The currency is expected to continue with its weakness if the policy makers do not act quickly to bring the currency and the economy back on track,” Abhishek Goenka,CEO,India Forex Advisers said.
The premium for the forward dollar today dropped sharply on sustained receivings by exporters.
The benchmark six-month forward dollar premium payable in October dipped further to 140-142 paise from overnight close of 147-149 paise and far-forward contracts maturing in April also tumbled to 259-260 paise from 273-275 paise.
The RBI fixed the reference rate for the US dollar at 55.5835 and for euro at 69.7325.
The rupee fell back sharply to 87.23 against the pound sterling from Tuesday’s close of 86.63 and also turned negative to 69.87 per euro from 69.42. It moved down against the Japanese yen to 70.00 per 100 yen from last close of 69.55.