Rupees tumbles by 36 paise to 2-year low of 66.82 per $
BY PTI8 Sep 2015 10:26 PM GMT
PTI8 Sep 2015 10:26 PM GMT
The rupee plunged by 36 paise to close at 2-year low of 66.82 against the American currency on Monday on persistent dollar demand from banks and importers due to sustained foreign capital outflows amidst sharp fall in equity markets. The domestic currency opened lower at 66.60 as against last weekend’s level of 66.46 at the Interbank Foreign Exchange (Forex) market.
It dipped further to 66.86 before concluding at 2-year low at 66.82, showing a loss of 36 paise, or 0.54 per cent. It had last ended at 67.07 on September 4, 2013. The rupee has dropped 63 paise, or 0.95 per cent, in three trading days.
Forex dealers said volatile domestic equities coupled with higher dollar overseas impacted the rupee sentiment. The dollar index was down by 0.02 per cent against a basket of six major currencies.
“The USD-INR currency pair will continue to get influenced by global forex and domestic equity moves,” a dealer said, adding that exporters are expected to hedge their US dollar receivables on upticks towards 66.86. Oil prices eased in Asian trade on Monday as dealers await the US Federal Reserve’s decision on whether to raise interest rates, following a mixed August jobs report, analysts said.
Meanwhile, the benchmark BSE Sensex ended lower by 308.09 points, or 1.22 per cent, to close below the 25,000-level — for the first time in 15 months — at 24,893.81. Veracity Group CEO Pramit Brahmbhatt said, “The rupee depreciated on cues from weakness in local equities as investors continued to stay away from the uncertain market.”
The trading range for the Spot USD/INR pair is expected to be within 66.40 to 67.40, he added. In <g data-gr-id="32">forward</g> market on Monday, <g data-gr-id="33">premium</g> for dollar eased further on persistent receivings from exporters.
The benchmark six-month premium payable in February eased to 205-207 paise from the last weekend’s level of 207-209 paise and far-forward August 2016 contracts also moved down further to 420-422 paise from 422-424 paise previously. The RBI fixed the reference rate for the dollar at 66.7445 and for the euro at 74.2733.
The rupee ended lower against the pound sterling to close at 102.00 as against 101.17 and also fell against the euro to 74.47 from 74.03 previously. It also dropped against the Japanese currency to finish at 55.96 per 100 yen from 55.77 in the previous session.
'Rupees should fall more to curb China dumping’
As the rupee touched a new 2-year low, State Bank chairperson Arundhati Bhattacharya on Monday said it must fall further to help domestic exporters. "It (further fall in the rupee) is required, otherwise exports will become absolutely unviable. It is important to maintain parity. It can be achieved only if the rupee is allowed to depreciate further," Bhattacharya replied when asked about the impact of the yuan devaluation on the country.
The RBI officially does not enter the forex market to set a price for the rupee but intervenes only when there is excess volatility in the market. The last time the country devalued the rupee was in early July 1991, following a balance of payment crisis and the country sought a $2.2 billion bailout from the IMF as forex cover dipped to just three weeks or about $500 million.
Following this, the rupee was devalued twice in a week to the tune of around 20 per cent. The first official devaluation took place in 1966. Since China officially paired down the official value of the yuan in July by close to 5 <g data-gr-id="105">per cent</g> and since then allowed it to fall further in the market following a massive route in the stock market which has lost more than half of its value since June, the rupee and the domestic stock markets have been under stress.
Noting that the rupee fall has been mainly against the US dollar only, the SBI chief said the rupee has been doing well compared to many other currencies and is still trading higher than its actual REER (real effective exchange rate) value against many of its global peers. Admitting that there could be short-term pains if the rupee falls further, she said the short-term difficulties will arise for those exporting raw materials like iron ore and cotton yarn to China.
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