Rupee has once again lost ground against US dollar diving to a record low of 61.21 on Monday after better-than-expected US jobs data raised concerns about the US Fed easing its stimulus programme. The record low closing of the domestic currency means problems of common man will be further aggravated as prices of everyday use items would be costlier sooner rather than later.
The rupee opened at 60.95 a dollar compared with Friday’s close of 60.22 and dipped to 61.21, past its previous all-time low of 60.76 on June 26. local shares were sluggish amid sustained dollar demand from importers, mainly oil refiners.
The rupee bounced back after the Reserve Bank of India (RBI) intervened through public sector banks, reaching a high of 60.58 before settling at 60.61, still a fall of 39 paise, or 0.65 per cent, the second straight day of losses.
The rupee hit its key psychological level of 61.00 and closed the session at 60.62 levels. The USDINR pair made a high of 61.20 levels and a low of 60.61 levels. “It was very much expected that the rupee will open on a weaker note against the US dollar. The US dollar index was trading at its three year high and the Euro was sustaining near $1.2850 levels which was making a strong case for the rupee weakness,” said India Forex Advisors Founder & CEO Abhishek Goenka.
“The recent RBI statement that it would not defend any particular exchange rate added to the woes of the Indian Rupee and crushed the investors hopes for any intervention by the RBI to support the dwindling Rupee. Technically the levels seen on top is 61.20 and if the market continues to sustain above it then we could see a fresh deterioration coming up in the pair,” added Goenka.
A falling rupee has a cascading effect on inflation as imports like oil become costlier, widens the current account deficit (CAD) and increases the risk of capital outflows.”Expect spot rupee to trade over 62 levels in coming days,” said Pramit Brahmbhatt, CEO, Alpari Financial Services.
The benchmark S&P BSE Sensex on Monday fell 171.05 points, or 0.88 per cent, while FIIs sold shares worth Rs 204.46 crore, as per provisional data with the BSE. The dollar index, which was trading at a nearly three-year high, was down by 0.09 per cent against a basket of six major currencies.
On Friday night, data showed that US non-farm payrolls for June saw an addition of better-than-expected 195,000 jobs. This fuelled speculation that Fed will announce tapering of its stimulus as early as July, said traders. Rupee has depreciated over 13.50 per cet in past nine weeks.