Rupee sinks to 60.76 against dollar
Mumbai : The Indian rupee hit another record low Wednesday, slipping below the psychological resistance level of 60 against a dollar, due to high month-end demand for the US currency by importers and sustained outflow of money.
The partially convertible rupee slumped to 60.76 against a dollar at the inter-bank foreign exchange market here, surpassing its previous record low of 59.98 hit on June 20.
The rupee ended the day at 60.72 against its previous day’s close at 59.67 against a dollar.
There was high volatility in the currency market. The rupee touched a high of 59.60 and low of 60.76 intra-day. The Indian currency fell sharply tracking weakness in other major global currencies including euro and British pound, against the dollar.
Analysts said the Indian currency would weaken further.
“If the market sustains above-60 levels on a closing basis then there is a possibility that it might hit the next technical key-level of 61,??? said Abhishek Goenka, chief executive officer of India Forex Advisors.
“We have witnessed huge outflows from the debt market in the current month which is putting severe pressure on the rupee. The prominent reason behind a massive outflow is the fading arbitrage opportunity for the foreign investors,??? Goenka said.
The Indian currency has depreciated almost 7 percent this month. The fall is largely due to huge outflows of overseas money from debt as well as equities markets.
Key indices of the Indian stock markets ended in the red tracking weakness in currency. The benchmark Sensex of the Bombay Stock Exchange (BSE) closed 0.41 percent or 77.03 points down at 18,552.12 points.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed in negative territory. It closed down 0.36 percent or 20.40 points at 5,588.70 points.
“FIIs have pulled out big money and it will be good if they bring back money after FDI cap is raised. In any case, Nifty has fallen 11 percent in June hence reversal is on cards whether FDI is raised or not,??? said Kishor P. Ostwal, chairman and managing director, CNI Research.
The Indian currency and equities markets are under pressure after the Federal Reserve, US central bank, signalled that it would start winding down its stimulus spending later this year.
Federal Reserve chairman Ben Bernanke said June 19 that the Fed may trim this year $85 billion a month of debt purchases, also known as quantitative easing, and might end it in 2014 if the US economy performs in line with its estimates and job situation improves.
The Fed comments have led to a broad rally in the dollar. However, Indian currency is among the worst hit.
Photo : AFP
