On a day the rupee dropped to a near nine-week low,extending its losses for a fifth session on the back of continued greenback demand from importers amidst a strengthening US currency in global markets,the finance ministry launched a strong defence of the currency,saying punters are likely to suffer “heavy losses”.
“I think a crazy,irrational kind of a sentiment is (prevailing in the forex market) … Whoever is punting on the rupee will lose very heavily. I feel very sorry for their families,” economic affairs secretary Arvind Mayaram told reporters here.
Traders largely attribute the rupee’s weakness to the return of state-run oil refining firms,which are now sourcing around 40 per cent of their dollar requirement from the forex market instead of getting it over the special window provided by the RBI in late August. Referring to the special swap windows,Mayaram said,”(inflows) could cross $25-30 billion by the end of it (November 30,when swap windows close)”,and the rupee will stabilise soon.
The market plunged even as finance minister P Chidambaram held a meeting with foreign institutional investors (FIIs),who were “bullish” on India. After his meeting with FIIs,Chidambaram said,”everyone was here,everyone was bullish,there were no concerns”.
On Tuesday,the currency resumed lower at 63.35 and moved in a range of 63.30 to 63.84 against the dollar before settling at 63.71,a fall of 47 paise or 0.74 per cent. The rupee has plunged 209 paise,or 3.39 per cent,in five straight sessions. It is at the lowest level since closing at 63.84 on September 10.
On the other hand,continuing its freefall for the sixth day in a row,the Sensex slid 209 points to a one-month low of 20,281.91 before the release of industrial production and consumer inflation data. It has shed over 957 points since ending at the record close of 21,239.36 on November 3.