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Rupee struggles at 9-month low on forex outflow fears

The rupee remained under immense pressure and continued to slide against the US dollar with the domestic currency ending lower by 9 paise at 68.25 - its lowest level in nine-months on heightened capital outflows.


Rupee struggles at 9-month low on forex outflow fears

Mumbai: The rupee remained under immense pressure and continued to slide against the US dollar with the domestic currency ending lower by 9 paise at 68.25 - its lowest level in nine-months on heightened capital outflows.

A smart rebound in local equities alongside soft dollar overseas sentiment even failed to arrest the fall.

However, suspected RBI intervention largely curbed sharp rupee volatility.

Heavy demand for the American currency from importers and banks mainly weighed on the domestic currency, forex dealers said.

Foreign portfolio investors (FPIs) sold heavily on Indian stocks overnight worth a net Rs 1,310.82 crore after a massive unwinding of Rs 18,840 crore last week due to surprising currency depreciation.

Most Asian currencies have been battered by the stunning rally in US dollar in the wake of Donald Trump s unexpected win in the US presidential election and hardening expectations of Fed rate hike this year.

The American dollar was propelled by a sharp rise in US yields.

At the Interbank Foreign Exchange (Forex) market, the local currency resumed modestly higher at 68.13 as compared to Monday's closing value of 68.16 and gained further ground on largely tracking firm equities and weak dollar overseas.

But, it failed to maintain early gains and gradually drifted to hit a fresh intra-day low of 68.2650 during the late afternoon deals due to fresh demand for the dollar before ending at 68.25, revealing a loss of 9 paise, or 0.13 per cent.

In worldwide trade, the greenback retreated from a six-month high against the yen on Tuesday during the Asian session alongwith other major commodities-linked currencies.

The dollar Index (DXY), which tracks the buck against a basket of its peers was quoted higher at 101.03 in the afternoon trade.

Meanwhile, the RBI today fixed the reference rate for the dollar at 68.2317 and euro at 72.4348.

In cross-currency trades, the rupee retrated sharply against the pound sterling and finished at 85.01 from 84.14, but recovered against the euro to settle at 72.62 from 72.79 yesterday.

The home unit, however ended virtually steady against the Japanese yen at 61.62 per 100 yens.

On the domestic equity front, frantic short-covering and value buying helped the bourses to snap a six-day down trend and bounce back smartly.

The flagship sensex shotup over 195 points to end at 25,960.78, while broder Nifty surged 73 points to 8,002.30.

In the forward market, premium for dollar continued to fall due to persistent receivings from exporters.

The benchmark six-month premium for April dropped to 119-121 paise from 125.5-127.5 paise and the far-forward October 2017 contract also shed to272-274 paise from 282.5-283.5 on Monday.

Crude prices rose sharply to hit an one-month high on growing expectations that OPEC would overcome internal disputes and scepticism to strike a deal with key member counteries to reduce crude output next week and also buoyed by positive comments from Russian President Putin.

From Zee News

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