Rupee tanks 110 paise to 64.30 against dollar
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Rupee tanks 110 paise to 64.30 against dollar

Last Updated: Monday, August 26, 2013, 18:29
 
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Rupee tanks 110 paise to 64.30 against dollar
Mumbai: The rupee on Monday tumbled 110 paise to once again close below the 64 mark against the dollar, giving up a major part of Friday's gains amid heavy month-end dollar demand from importers and capital outflows.

A strengthening dollar overseas and late weakness in local stocks also put pressure on the rupee, a forex dealer said. Global ratings agency Fitch today said India's fiscal numbers "look weak" and warned of a downgrade if the country is unable to meet the fiscal deficit target.

At the interbank foreign exchange market, the rupee opened lower at 63.65 a dollar from the previous close of 63.20 and dipped further to the day's low of 64.75.

The local currency recovered some ground after the Reserve Bank of India (RBI) was said to have stepped in through state-run banks, helping the rupee to end at 64.30, a fall of 110 paise or 1.74 percent.

"The RBI, which was there in the market on Friday, was not seen today, at least till 4.30 pm today. After that, there was some hint of intervention by the RBI. Month-end dollar demand from oil importers kept rupee under pressure," said Navin Raghuvanshi, VP for treasury at Development Credit Bank.

The benchmark S&P Sensex erased early gains and closed up 39 points, a gain of 0.21 percent. Foreign institutional investors withdrew a net Rs 148.57 crore of stocks on Friday, as per provisional data with the stock exchanges.

In the wake of the rupee's depreciation and doubts over revenue increase targets, the government has repeatedly asserted it will meet the fiscal deficit target of 4.8 percent. Fitch said the space to contain expenditure is very limited in the second half of the fiscal.

"A slowdown in fiscal expenditure in the second half of the year remains quite challenging," Fitch lead analyst Art Woo said on a conference call today.

The dollar index was up by 0.08 percent against a basket of six major global currencies after US Federal Reserve officials wrapped up a yearly gathering appearing ready to start slowing the monetary stimulus next month.

Concerns among investors about the widening current account deficit have led to turmoil in the stock markets and a sharp depreciation of the rupee.

On Saturday, Finance Minister P Chidambaram held meetings with overseas investors and top bankers in Mumbai as the government sought to allay apprehensions about the economic situation and appraise them of steps taken to boost growth and stabilise the rupee.

After the meetings, the Finance Ministry said steps to attract capital flows to fund the current account deficit can be expected within a week.

"India urgently needs to attract capital as foreign institutional investors have sold about USD 4.2 billion in bonds this year and USD 750 million in equities over the previous six sessions," said Pramit Brahmbhatt, CEO at Alpari Financial Services (India).

Forward dollar premiums recovered on fresh payments from banks and corporates.

The benchmark six-month forward dollar premium payable in January rebounded to 236-241 paise from Friday's close of 229-234 paise. Far-forward contracts maturing in July bounced back to 451-456 paise from 434-439 paise.

The RBI fixed the reference rate for the dollar at 64.2347 and for the euro at 85.9342.

The rupee fell to 100.12 against the pound from the previous close of 98.47 and tumbled against the Japanese yen to 65.21 per 100 yen from 63.80. It plunged to 86 per euro from 84.40.

PTI


First Published: Monday, August 26, 2013, 18:13


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