The Indian rupee on Wednesday breached the crucial 45 level for the first time in 22 months to close at 45.11/12, cheaper by 28 paise, against greenback on sustained demand for dollar from banks and oil refiners amid the US currency’s rally in overseas market.
Foreign exchange dealers said consistent capital outflows from equity markets also weighed against the rupee.
Oil refiners continued to buy dollar even though global crude oil prices hovered around $104 a barrel level in Asian trade during the day.
Dealers said dollar’s gaining strength against rival currencies in the overseas market prompted refiners and foreign banks to rush for the US currency as the greenback is not readily available globally.
“Increasing dollar demand and mismatch in supplies led to continuous pressure on the rupee, while portfolio inflows slowed down this year. The depreciation could be a cause of concern for the inflation levels in the country as well although it may help exporters,” a leading banker said.
There was heavy capital outflows so far in current calendar year in view of weak trend in stock markets.
Meanwhile, the benchmark Sensex on Wednesday dropped by 238 points or 1.60 per cent following weak trend in global markets.
While exporters are expected to cheer the fall in rupee as it would improve their profit margins, there are also apprehensions that a weak rupee would fuel inflation which is already hovering over 12 per cent.
However, analysts said forex market would be highly volatile in the coming days as the Reserve Bank is expected to intervene to stem the fall of rupee.
“The uncertainty in the forex market is likely to continue for the coming days. However, the fast decline in the rupee against dollar is a cause of concern as it will impact the imports in the country.” said Director of Kejriwal Research and Investment Services (KRIS) Arun Kejriwal.
The rupee premiums on forward dollar ended remarkably higher on continued paying pressure from banks as well as corporates.
The benchmark six-month forward dollar premium payable in February ended at 70 – 72 paise, higher from 63-1/2 – 65-1/2 paise on Tuesday and the far-forward maturing in August also closed up at 121 – 123 paise from 114-1/2 – 116-1/2 paise previously.
The Reserve Bank fixed the reference rate for the dollar at Rs 45.12 and for the single European currency at Rs 63.83.
In cross currency trades, the rupee moved down further against the British sterling, the euro and the Japanese yen.
The domestic unit dropped against the pound sterling to end the day at Rs 79.28/30 per pound from its previous close of 79.03/05 per pound and also eased against the single European currency to 63.65/67 per euro from its last close of Rs 63.49/51 per euro.
The rupee tumbled against yen to Rs 41.98/42.00 per 100 yen from its overnight close of Rs 41.49/51 per 100 yen.
Courtesy: profit.ndtv.com
