Economy suffers as Re dips 110P to lifetime low of 58.15 per $
The rupee on Monday sank by a staggering 110 paise to life-time low of 58.16 against dollar, making the struggling economy further vulnerable as imports become costlier, inflation risks rise and record high CAD worsens. A confluence of negative factors including heavy dollar demand and slowdown in capital inflows put pressure on the rupee, which has slumped by 8 per cent from 53.80 on 30 April.
Forex traders said there were no visible signs of RBI intervention to arrest rupee slide but expectations are high that the central bank will come with restriction on banks overnight net long positions to reduce the volatility and speculation like it did last year. RBI Governor D Subbarao in a recent interview to PTI had said the central bank does not target any level or band for the rupee against the dollar.
At the Interbank Foreign Exchange (Forex) market on Monday, the rupee commenced lower at 57.18 and immediately touched a high of 57.17. The local currency further reeled under pressure to register a low of 58.16 and concluded at 58.15, a whopping fall of 109 paise or 1.91 per cent. Rupee's earlier intra-day record low was 57.32 on 22 June, 2012.
Previously, rupee had tumbled by 124 paise, or 2.57 per cent, on 22 September, 2011 and by 119 paise, or 2.47 per cent, on 12 November, 2008. Last Friday's better-than-expected US jobs data appears to have given the dollar a new lease of life as economic recovery of the the world's largest economy means US Fed will probablt scale down its monetary stimulus programme soon.
Experts are already forecasting the battered rupee to sink further to near 60-levels. 'Unless, RBI takes some kind of steps to stabilize the currency, the rupee may touch 58.50-58.90 level against dollar,' said Hemal Doshi, Chief Currency Strategist, Geojit Comtrade.