Confused while buying stocks? Get buy, sell or hold recommendations from VantageTrade. Full Coverage
Rupee falls below 55/dollar to record low
MUMBAI (Reuters) - The rupee fell below the key psychological level of 55 to hit a new record low on Monday, setting up the prospect of further falls unless the RBI takes measures or intervenes more aggressively, traders said.
The rupee has now hit four consecutive record lows in as many sessions, at a time of intense turmoil over the euro zone, but traders saw no major signs of intervention from the Reserve Bank of India either on Friday or on Monday.
Despite the absence, traders are bracing for new measures from the RBI. The central bank has largely failed to prevent the rupee's falls this month despite selling dollars and taking steps to attract inflows via deposits and exporters' foreign currency holdings.
Traders say the rupee, which is Asia's worst-performing currency this year, has proven particularly vulnerable to the global risk aversion given the steep fiscal and economic challenges facing the country.
"With just six months worth import cover, twin deficits, lack of confidence in the coalition government with regards to reforms, and also failure to attract foreign flows, suggests the INR is likely to hit 56-56.50 in the next two months," said Pramod Patil, a FX dealer at United Overseas Bank.
The partially convertible unit hit a life-time low of 55.05 per dollar during the session, before closing at 55.03/04, according to SBI data, well below its 54.42/44 close on Friday.
Also weighing on the rupee was dollar demand from oil firms and corporates, dealers said.
Although profit-taking in the USD/INR cross could temper the pace of falls in the local unit in the near-term, the outlook for the rupee still remains very weak unless global risk aversion eases, traders said.
The one-month NDF was quoted at 55.45 while the three month NDF was at 56.10, both indicative of the expectations for further falls.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 55.09 on a total volume of $4.35 billion.
(Editing by Rafael Nam)
- Tweet this
- Share this
- Digg this