Rupee struggles at 9-month low over Forex outflow fears
The rupee remained in a tight spot and continued to slide against the US dollar, with the domestic currency ending lower by 9 paise at 68.25 — its lowest level in nine months — on heightened capital outflows.
A smart rebound in local equities alongside soft dollar overseas sentiment even failed to arrest the fall.
However, suspected RBI intervention largely curbed sharp rupee volatility.
Heavy demand for the American currency from IMPORTERS and banks mainly weighed on the domestic unit, forex dealers said.
Foreign portfolio investors (FPIs) sold heavily on Indian stocks overnight worth a net Rs 1,310.82 crore after a massive unwinding of Rs 18,840 crore last week due to the surprising currency depreciation.
Most Asian currencies have been battered by the stunning rally in US dollar in the wake of Donald Trump’s unexpected win in the US presidential election and hardening expectations of a Fed rate hike this year.
The American dollar was propelled by a sharp rise in US yields.
At the Interbank Foreign Exchange (forex) market, the local currency resumed modestly higher at 68.13 as compared to Monday’s closing value of 68.16 and gained further ground on largely tracking firm equities and a weak dollar overseas.
But it failed to maintain early gains and gradually drifted lower to hit a fresh intra-day low of 68.2650 during the late afternoon deals due to fresh demand for the dollar before ending at 68.25, a loss of 9 paise, or 0.13 per cent.
The unit had seen similar level in February when it had closed at 68.42 on February 29.
In worldwide trade, the greenback retreated from a six-month high against the yen on Tuesday during the Asian session along with other major commodities-linked currencies.
The dollar Index (DXY), which tracks the buck against a basket of its peers was quoted higher at 101.03 in the afternoon trade.
Meanwhile, RBI today fixed the reference rate for the dollar at 68.2317 and euro at 72.4348.
In cross-currency trades, the rupee retreated sharply against the pound sterling and finished at 85.01 from 84.14, but recovered against the euro to settle at 72.62 from 72.79 yesterday.
The domestic unit, however, ended virtually steady against the Japanese yen at 61.62 per 100 yens. .