Rupee slumps to new 10-mth low at 56.38 against dollar
Mumbai: Continuing its downslide, the rupee Thursday lost 21 paise to end at new 10-month low of 56.38 on fag-end spurt in dollar demand after RBI Governor D Subbarao painted a dim macro economic picture fuelling fears of local currency plunging to record low levels in the short-term.
Ahead of expectations of steady US GDP and jobs data that may force Federal Reserve to consider early withdrawal of stimulus, the US dollar strengthened against major rivals.
The rupee, which fell for the third straight day, ignored the USD 140 million capital inflows in equities. Forex dealers said there was no sign of RBI intervention in forex market.
At Interbank Foreign Exchange (Forex) market, rupee commenced slightly better at 56.15 a dollar from previous close of 56.17 and improved further to 56.04.
However, it turned negative tracking Subbarao's comments and declined to a low of 56.39. It finally settled at 56.38, a fall of 21 paise or 0.37 percent.
Subbarao in Ahmedabad said CPI inflation is still high.
"There are certain factors like sectoral imbalances...We have the highest fiscal deficit as compared to our peer emerging economies...Our external sector problem is large current account deficit," he said.
In three-day downmove, rupee plunged by 81 paise or 1.45 percent. In May so far, it has dropped by over 4.5 percent.
Considering the global trends, rupee is likely to revisit record lows of 57-level, analysts said. All eyes are now on India's Q4 GDP data that will be released tomorrow.
"The rupee was trading quietly but RBI Governor's comments on CAD, balance of payments and inflation unnerved the currency. It can touch 56.6 level soon," said Dhanlaxmi Bank Executive Vice-President Srinivasa Raghavan.
"Rupee movement was mainly due to month end demand for dollars by oil importers along with volatility in the equity market. Also, international factors like strengthening of dollar influenced the movement," said N S Venkatesh, Head of Treasury of IDBI Bank.