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Rupee hits new low at 53.71 against US dollar


AGENCIES | Mumbai, December 14, 2011 18:44
Tags : Indian rupee | US dollar | Rupee falls | Rupee hits new low at 53.71 |

The rupee on Wednesday touched a fresh all-time low of 53.71/72 against the dollar, amid continuing capital outflows and further appreciation of the US currency against its major rivals, particularly euro.

After slipping to sub-53 level on Tuesday, the local currency further plunged to 53.54/55 per dollar in the opening trade at the Interbank Foreign Exchange.

It even inched closer to 54-level intra-day, as it dropped to 53.88 at one point. The local currency finally settled at 53.71/72 a dollar, a loss of 48 paise or 0.90 per cent.

Foreign exchange dealers said persistent dollar demand from banks and importers amid a continued pullout of capital by foreign funds weighed against the rupee.

"The rupee continued its fall
on Wednesday as the dollar strengthened further against euro, breaching the 1.3 level. In addition, inflation numbers for November was not up to market expectations, adding to economic woes, and it pulled down the local currency, Ramesh Krisnan, head of treasury, Dhanlakshmi Bank, said.

The rupee has come under severe pressure, amid strong signs of slowdown in economic growth, a contraction in industrial output, rising fiscal deficit and current account deficit.

"The country is facing a lot of structural issues like high current account deficit, high trade deficit with a possible slippage of fiscal deficit target. These factors along with negative sentiment in the currency market is dragging rupee down," IDBI Bank Head of Treasury N S Venkatesh said.

Referring to outlook, Venkatesh said, " Present rupee level doesn't support the fundamentals of Indian economy. It's more of a bearish sentiment that is pulling down the rupee.

So, rupee will come to sub-50 level by March as structural issues are addressed by the government with some capital inflow measures by the central bank and the government."
Krishnan also said rupee may snap its losing trend soon as 10-year bond yields have touched a high of 8.5 per cent on Wednesday.

In London, the euro hit an 11-month low against the dollar to 1.3005 and stocks eased after the Federal Reserve warned Europe's sovereign debt crisis could hurt the US economy but failed to signal fresh action to stimulate growth.

The rupee premium for the forward dollar remained firm on sustained paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in May settled up at 147-149 paise from Tuesday's level of 136-138 paise and far-forward contracts maturing in November also ended sharply higher at 239-241 paise from 222-224 paise.

The Reserve Bank fixed the reference rate for the US dollar at Rs 53.5770 and for the euro at Rs 69.8925.

The rupee moved down further against the pound sterling to end at Rs 83.12/14 from yesterday's close of 83.07/09 and also declined further against the Japanese yen to 68.84/86 per 100 yen from overnight closing level of 68.47/49. However, it recovered to close at 69.87/89 per euro from 70.36/38.

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Issue Dated: Feb 5, 2017