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This is an archive article published on June 7, 2013
Rupee battered by prospects for stronger dollar,high CAD
The rupee fell to 57 per dollar for the first time in almost a year amid concern the US Federal Reserve will rein in asset purchases
Written by ENS Economic Bureau
Mumbai | June 7, 2013 01:16 AM IST
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The rupee fell to 57 per dollar for the first time in almost a year amid concern the US Federal Reserve will rein in asset purchases that fuelled fund flows into emerging markets. However,the currency recovered partially towards end of trade to close at 56.84,a fresh 11-month level,due to dollar sales by banks.
Finance minister P Chidambaram,said there is no cause for concern as capital inflows were strong. I think the rupee will stabilise and find its correct level, he said.
Analysts attributed the decline to the broad-based demand for the dollar. US Federal Reserve chairmans statement that the Fed could pull back stimulus,should they see a sustained economic improvement has pushed US bond yields higher,making them more appealing to investors,improving demand for the dollar, said Sanil Kumar,head-sales,Geojit BNP Paribas Financial Services.
Another reason for the weakening is the widening current account deficit,especially due to rising gold imports. According to World Gold Council,India could import almost 400 tonnes of gold in the April-June period.
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