Rupee hits all-time low of 56.57; RBI intervenes to stem slide
Mumbai: The rupee on Thursday hit all-time low of 56.57 on sustained dollar demand from oil importers amid a sharp fall in crude prices, before the Reserve Bank intervened to help the local currency to recover some ground but it still ended 15 paise down at 56.30.
Lesser-than-expected aggressive measures by US Federal Reserve, weak economic Chinese data and a fall in the dollar's main rival euro ahead of an audit of Spanish banks, helped the American currency rise and sentiment was against the rupee right from the outset.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed weak at 56.35 a dollar as against last close of 56.15. Month-end dollar demand from importers, mainly oil refiners, to meet their requirements, put more pressure on rupee as Brent crude hit a 18-month low of USD 91 per barrel.
This pushed the rupee to a record low 56.57 (intra-day), eclipsing the previous low of 56.52 registered on May 31.
However, intervention by the Reserve Bank and a late rally in Indian stocks helped the rupee finally close at 56.30, down 0.27 percent. This closing value is also the weakest for the currency, lower than the 56.23 hit on May 30.
"There was intervention by the RBI during end of the session after rupee breached Rs 56.40 level. However, if the domestic currency doesn't close above Rs 56.50 level, it will recoup to Rs 55.80 level in near-term," said Hemal Doshi, Currency Strategist, Geojit Comtrade.
The rupee has fallen by 90 paise or 1.62 percent in four consecutive days amid worries over country's economic health.
A treasury official of a public sector bank said going ahead, the RBI's ability to intervene will be less till June end due to tight liquidity in the system.
"The burden of huge debt payment will continue to boost dollar demand and we target rupee moving ahead to 57.50-58," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Meanwhile, the stock market benchmark BSE Sensex today closed above 17,000-level for the first time in seven weeks.
According to Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, the rise in dollar index due to global risk adverse sentiments continued to weigh on rupee.
The dollar index was up by 0.03 percent against a basket of six currencies.
"Weak Indian equities initially supported the weakness in rupee but a sharp rebound in last hour eased some of the pressure on the currency," he added.
Globally, the mood was negative after Fed yesterday said the US economic growth in 2012 would be between 1.9 percent and 2.4 percent. This is lower than the April projection of 2.4 percent to 2.9 percent.
"Global investors continued to shun risky assets..." said Amar Ambani, Head of Research, IIFL.
There was no major support for rupee from FIIs who had sold stocks worth Rs 257 crore in the stock market today.
The premium for the forward dollar reacted downwards on fresh receivings by exporters.
The benchmark six-month forward dollar premium payable in November ended down at 154-156 paise from yesterday's close of 158-159 paise.
The far-forward contracts maturing in May also finished lower at 295-297 paise from 300-302 paise.
The RBI fixed the reference rate for the US dollar at 56.4178 and for euro at 71.5215.
The rupee eased further to 88.49 against the pound sterling from overnight close of 88.41 and also remained weak against the euro to 71.46 from 71.37.
However, it bounced back against the Japanese yen to 70.39 per 100 yen from last close of 71.03.