Rupee weakens for 6th-straight week; closes at 57.51 Vs dollar
In the last six weeks, rupee had plunged by 357 paise or 6.62 percent.
Mumbai: The Indian rupee came off from its life-time low of 58.98 registered on Tuesday, but continued to rule weak for the sixth consecutive week, closing down by 45 paise at 57.51 against the Greenback on weak local equities and dollar demand from importers and some banks.
Fresh capital outflows also weighed on the rupee.
The rupee resumed the week lower at 57.18 from last weekend's close of 57.06 and tanked by 109 paise on Monday, registering its biggest loss since September 22, 2011 when it had tumbled by 124 paise, or 2.57 percent.
Later, it continued to reel under pressure and logged an all-time low of 58.98 on Tuesday on weak economic fundamentals, costlier imports, inflation risks rise and record high current account deficit (CAD).
But, the intervention of the apex bank in the forex market at the rupee's lowest level to stem the slide later helped the rupee to bounce back to settle the week at 57.51, still showing a fall of 45 paise or 0.79 percent.
In the last six weeks, it had plunged by 357 paise or 6.62 percent.
The benchmark S&P BSE Sensex dipped by 251.30 points or 1.29 percent while FIIs pulled out Rs 2,515.68 crore during the week, including provisional figure of June 14.
"RBI was possibly waiting to enter the scene at levels where importers step out and exporters step in. It did so on Tuesday at around 58.9 levels. While the risk of rupee going to 60-levels is diluted, more is needed to bring it back to 57-levels," said Moses Harding, Head - ALCO and Economic & Market Research, IndusInd Bank.
The rupee has weakened from 53.8 levels in April-end to over 58-levels at present and is also among the worst performing emerging market currencies in the 2013 so far.
"This is a temporary phase. This is simply a correction. Our indication is some of the FIIs are now poised to bring in large funds. In next 3-4 days, we will see a mid-course correction," Department of Economic Affairs Secretary Arvind Mayaram said in New Delhi.
Chief Economic Advisor Raghuram Rajan said Finance Ministry will recommend to the Cabinet, policies to enhance FDI limits on number of areas. All this will help not just in short-term objective of financing the CAD safely but also in the longer term objective of ensuring sustainable growth.
Selling by FIIs last week in debt securities also put pressure on the rupee, said experts.
The rupee also got support after the rating agency Fitch revised India's credit outlook to stable from negative and government officials soothed market sentiment with assurance of taking steps to curb the currency's fall.
Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) Pvt. Ltd. Said, "Rupee traded volatile this week, in the first session of the week. It traded weak against the dollar and crossed all time low of 57.32 to make a new low of 58.98 taking cues from weak domestic fundamentals, record current account deficit, high inflation and debt outflows.
Also, the Index of Industrial Production (IIP) data for April was out at 2 percent; lower than the 2.7 percent that the market was expecting whereas the Consumer Price Index-based inflation for May came in at 9.31 percent which was above the estimates.
"In the second session, Rupee traded strong and tried to recover from the fall, taking cues from the strong local equities at the fag end of the week as the inflation data was out and reading was the lowest in more than three years. The trading range for the Spot USD/INR pair is expected to be within 57.00 to 58.00," he added.
The premium for the forward dollar dropped further on sustained receipts by exporters.
The benchmark six-month forward dollar premium payable in November ended lower at 148-150 paise as against the last weekend's level of 155-157 paise and far-forward contracts maturing in May also dipped to 298-300 paise from 309-311 paise.
The RBI fixed the reference rate for the US dollar at 57.7410 and for the euro at 77.0225 from previous weekend's level of 56.7445 and 75.2033, respectively.
The Rupee slumped against the pound sterling to 89.97 from preceding weekend's close of 88.90 and also declined sharply against the euro to 76.59 from 75.66.
It too tumbled against the Japanese yen to 60.59 per 100 yen from last weekend's close of 59.67.