Journalism of Courage
The rupee fell 67 paise to an all-time closing low of 61.10 against the US dollar on Friday,raising doubts on the effectiveness of a host of measures taken by the RBI and the government to salvage the currency. While the previous record low closing was 60.72 on June 26,the rupee had touched an all-time intra-day low of 61.21 on July 8.
According to market players,the RBI measures have not been able to defend the rupee as global factors have brought about greater uncertainty in the forex market. The currency,which fell 3.4 per cent this week,is below the levels at which it was trading on July 15 when the RBI unveiled steps to defend the rupee.
The consistent weakness in the rupee,despite RBIs and governments efforts,has impacted sentiments, said Dipen Shah,head of Private Client Group Research,Kotak Securities. The RBI has left interest rates unchanged and has made future policy decisions largely contingent on the rupee movement. We believe that,the government will take initiatives,which may restrict the depreciation of the rupee and may provide relief to the markets. However,more structural reforms in investment-led sectors are needed to bring in more foreign capital,correct the BoP imbalances and support the rupee. Forex market analysts said the RBI might have intervened in the market to defend the rupee. Today also,RBI intervention was suspected in the forex markets to support rupee, said Pramit Brahmbhatt,CEO of Alpari Financial Services. In order to contain current account deficit and arrest value of declining rupee,the RBI,last month,had raised the cost of borrowing for banks and reduced availability of funds to curb speculation in the forex market.
Sensex ignores new FDI norms,dips 153 points
Mumbai: The benchmark S&P BSE Sensex on Friday surrendered initial gains from liberalised FDI norms and declined 153 points,the eighth day of losses,as the rupee weakened past the 61 level again.
The 30-share Sensex opened at 19,399.55 points and climbed to a high of 19,451.70 on buying in some blue chip counters from consumer durables,IT and refinery sectors following the governments decision yesterday to relax foreign direct investment (FDI) rules in several sectors.
Dragged down by a weak rupee and FII selling,the index then declined to 19,078.72 before closing at 19,164.02,a loss of 153.17 points,or 0.79 per cent. This is the second weekly drop for the Sensex,which has fallen 1,138.11 points,or 5.61 per cent,in the past eight sessions.
The 50-share Nifty index on the NSE dropped 49.95 points,or 0.87 per cent,to 5,677.90. The SX40 index on the MCX-SX closed 0.94 per cent lower.
The fall in the markets during the week has come about despite good gains in global markets,indicating the pre-dominance of domestic concerns, said Dipen Shah,head of Private Client Group Research at Kotak Securities. The consistent weakness in the rupee,despite RBIs and governments efforts,has impacted sentiment, he added. pti
