FII attack ravages rupee to record 60.72 low per dollar
The rupee tanked by a massive 106 paise on Wednesday to close at an all-time low of 60.72 against the dollar on heavy capital outflows and month-end greenback demand from importers, even as the Reserve Bank of India (RBI), the country’s central bank, intervened to stem the currency slide. The Indian currency resumed lower at 59.74 per dollar from the overnight close of 59.66 at the Interbank Foreign Exchange (Forex) market and immediately touched a high of 59.72.
As dollar demand surged, the rupee continued to reel under pressure and touched an all-time intra-trade low of 60.76 and finally ended at 60.72, a steep fall of 106 paise (1.78 per cent). On June 10, 2013, it had tumbled by 109 paise (1.91 per cent).
Foreign institutional investors (FIIs) pulled out nearly Rs 550 crore from stocks on Wednesday, taking the June outflows to about Rs 9,000 crore. In the debt segment, they have pulled out Rs 27,850.20 crore till June 25.
‘The RBI was seen (intervening) at 59.90 level during early trade and the rupee was trading in a 5-10 paisa range. But the moment the rupee touched 60, stop-loss was triggered which led to sharp fall of the rupee,’ said Hemal Doshi, Chief Currency Strategist with Geojit Comtrade. Unless measures are announced by the government and the RBI, the rupee may see a 62-62.50 level in the near-term, he added.
The dollar index of six major global rivals was up by 0.24 per cent, supported by data underscoring the US Federal Reserve Board’s (Fed) view of an improving American economy and a likely slowdown in monetary stimulus.
Pramit Brahmbhatt, CEO of Alpari Financial Services (India), said, ‘The rupee had a free fall on Wednesday... The dollar index traded strong against other major rivals and traded at a three-week high. The trading range for the spot rupee is expected to be 60.30/ 61.10.’
The over 7 per cent slump in the rupee in June has triggered a fresh set of worries.
‘A weaker rupee can add to inflationary pressure, widen the fiscal deficit and slow capital inflows without having a positive effect on the current account deficit (CAD). Rapid depreciation also affects business sentiment negatively,’ pointed out Standard Chartered in a report.