Rupee hits record low; on watch for possible RBI intervention

Mangalore Today News Network

Mumbai, June 10, 2013: The rupee dropped to a record low in early trade on Monday tracking gains in the US dollar after disappointing data from China and slightly better-than-expected US jobs data.

Traders are on watch of any intervention from the Reserve Bank of India (RBI). There has been little indication the RBI has intervened to prevent rupee weakness in recent sessions, according to traders.

The partially convertible rupee was trading at 57.37/38 per dollar after hitting a record low of 57.38, past the previous all-time low of 57.32 hit in June 2012. The rupee had closed at 57.06/07 on Friday.

"Rupee will remain under pressure in the near-term as the fundamentals are weak due to high current account deficit and trade deficit," Head of Treasury of IDBI Bank N S Venkatesh told reporter.

He also said the recent depreciation in the rupee was mainly due to apprehension by market participants regarding tapering of stimulus given by the US central bank.

The domestic currency had lost around 5.6 per cent since May, 2013 after the Federal Reserve had hinted at tapering of stimulus given by it.

Referring to this issue, Chief Currency Strategist of Geojit Comtrade Hemal Doshi said the rupee would be under pressure till it crossed 56.70 in the near-term.

"Rupee will see some stabilisation after it crosses 56.70 on technical side. However, the market remains in a bearish mode at present," Doshi said.

However, some of the treasury officials are also hopeful that rupee at 57 level will prompt remittances flowing to the country along with dollar selling by exporters.

"I hope that higher remittances will come into the country at these levels. Even, exporters may sell dollar in this kind of attractive levels," Venkatesh said.

Last week, Deutsche Bank in a report said the fall in the domestic currency is temporary and is likely to bounce back in second half of 2013.