• search
For Mumbai Updates
Allow Notification  
Oneindia App Download

Rupee falls to two-year low, recovers

By Ians English
Google Oneindia News

Mumbai, Nov 27: The Indian rupee dipped in the early hours of trade on Friday to its lowest level against the US dollar in over two years, mainly on account of American currency gaining strength, but recovered somewhat on likely sales by the central bank.

The Indian currency was at 66.88 to a dollar at 9.15 a.m., falling nearly 40 paise in two days on account of selling by foreign funds.


After quoting at the lowest levels since September 2013 in early trade, the rupee closed the day's trade weaker by 19 paise at 66.76 to a US dollar from its previous day's close of 66.57 to a greenback.

Analysts said dollar sales by public sector banks, ostensibly at the behest of the Reserve Bank of India (RBI), cushioned the losses.

Besides RBI's interventions, the gains made by the equity markets in the day's trade doused the volatility in the Indian currency's value.

The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed the day's trade up 170 points or 0.65 percent.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) made gains during Friday's trade session and closed higher by 59 points or 0.75 percent at 7,942.70 points.

Hiren Sharma, senior vice president, currency advisory at Anand Rathi Financial Services, told IANS that the accumulated dollar buying owing to two consecutive holidays for outright purchases put pressure on the rupee value.

The Indian spot markets were closed on Nov 25, followed by the US markets on Nov 26.

"Positive domestic equities and suspected selling has led the rupee to recover from the day's high," Sharma said.

Furthermore, there was the usual month-end demand for greenbacks from foreign banks and oil importers.

According to Sharma, the markets would remain choppy ahead of US Federal Reserves' (US Fed) December meeting, the critically watched Syrian conflict and recent terror attacks.

"Rupee will continue to be on a weaker side. It may hold in a range of 67.20 to 66.20 before US Fed's meeting," Sharma added.

Recent US economic data and signs from the US Fed has indicated an imminent rate hike in the US from December.

A rate hike in the US could potentially lead to massive amounts of pull-back of foreign funds from emerging economies like India.

Furthermore, the US dollar will strengthen against emerging market currencies, gold and other assest classes.

Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS that the rupee's position can change drastically -- if parliament is able to pass the Goods and Services Tax (GST) Bill.

"The trend of foreign institutional investors (FIIs) off-loading stocks due to the upcoming US FOMC (Federal Open Market Committee) and the expected rate hike in the US has impacted the rupee value," Banerjee said.RBI

"It is speculated that the Reserve Bank of India (RBI) entered the markets and sold dollars to arrest the rupee's fall. The RBI will get a big help if the GST is passed."

The government needs to pass the GST bill in this session to meet the April 1, 2016, roll-out deadline.

In addition, the FII's have been jittery owing to the Syria conflict, the Paris terror attacks and concerns about possible terupeerror threats worldwide.

The FIIs were net sellers in the day's trade at stock exchanges. They sold stocks worth Rs.519.25 crore. The FIIs have taken out Rs.23,352 crore during the August-September period.


For Daily Alerts
Best Deals and Discounts
Get Instant News Updates
Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X