Rupee nears 72 level on panic rush among investors for dollarshttps://indianexpress.com/article/business/market/rupee-nears-72-level-on-panic-rush-among-investors-for-dollars-5344042/

Rupee nears 72 level on panic rush among investors for dollars

Dealers said the central bank sold $24 billion during the span when the rupee fell from 65 to the dollar to 69 while it has sold just about $5 billion when it moved from 70 to 72.

Rupee nears 72 level on panic rush among investors for dollars
The RBI then intervened in a mild way and the rupee recouped partially and closed at 71.99 against the dollar. (Representational Image)

The rupee on Thursday fell below the 72 mark in intra-day trading for the first time and closed 23 paise down at 71.99 against the dollar as importers scrambled for the US currency and exporters remained on the sidelines.

With the token intervention by the Reserve Bank of India adding to the worries of the foreign exchange market, the currency hit 72.11 at one stage as exporters postponed dollar sales expecting further falls, while demand rose from importers and firms looking to hedge. The RBI then intervened in a mild way and the rupee recouped partially and closed at 71.99 against the dollar.

Sajal Gupta, head Forex & Rates, Edelweiss Securities, said, “the rupee needs more support from the RBI or some big global positive news. The trend remains weak until some sizeable intervention by the RBI — verbal or actual — happens. There is a lot of panic buying amongst importers and equity investors as well who want to hedge the currency risk now. Our macros remain robust but panic is the key factor behind current volatility. Everyone is a buyer of dollars in current market.”

The rupee lost nearly 12 per cent this year, making it the worst performing currency in Asia. Emerging market currencies like Argentine peso and Turkish lira have lost heavily on concerns of higher crude prices and tariff wars. The rupee’s sharp fall of nearly 3 per cent in the last 15 trading sessions has made imports costlier.

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Dealers said the central bank sold $24 billion during the span when the rupee fell from 65 to the dollar to 69 while it has sold just about $5 billion when it moved from 70 to 72. The pressure is likely to continue as state elections due in 2018, domestic inflation pressure, a widening current account deficit and expected rate hikes by the US Federal Reserve could accelerate the rupee’s fall.

Finance Minister Arun Jaitley had ruled out any “panic and knee-jerk reaction” to the rupee depreciation. “Most of the other currencies of the world, compared to what it was 4-5 years ago, Rupee is better off. The RBI is doing whatever is necessary. I don’t think there is any need for the world’s fastest-growing economy to come out with panic and knee-jerk reaction,” Jaitley said Wednesday.

Meanwhile, stock markets staged a strong comeback on Thursday after six straight sessions of losses as investors accumulated recently hammered healthcare, energy and power stocks. The BSE Sensex rebounded 224.50 points to end at 38,242.81, while the broader Nifty gained 59.95 points to 11,536.90.

Indices largely benefited from fag-end value buying in beaten-down stocks, lead by RIL and Sun Pharma, amid a rebound in European shares in late-morning trade, traders said. The session was marked by high volatility and stock-specific action. The 30-share Sensex stayed choppy on alternate bouts of buying and selling and shuttled between 38,320.96 and 37,912.50. It finally ended 224.50 points or 0.59 per cent higher at 38,242.81. The index had lost 878.32 points in the previous six sessions as the rupee plunged to a record low amid a general flight of capital from emerging market assets. The broader NSE Nifty too reclaimed the key 11,500-mark.

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