Rupee touches all-time low, recoups to end at 68.73

As the demonetisation after-effect played out and concerns grew about a possible Fed rate hike in the near term

Gulf News

MUMBAI: The rupee went into a free fall on Thursday as it slumped for the fifth session and even hit an all-time low of 68.86 (intraday) against the dollar as the demonetisation after-effect played out and concerns grew about a possible Fed rate hike in the near term.

However, a suspected RBI intervention stemmed the slide of the rupee, which recovered partially to end the day at 68.73 — a 39-month closing low.

If the same trend continues, analysts say, the rupee may even touch the 70 level in the near future.

The rupee opened lower at 68.74 per dollar as against Wednesday’s closing level of 68.56 at the forex market and dropped to an all-time low of 68.86 before ending at 68.73.

As the rupee plunged to a record low on Thursday, the finance ministry stepped in and said it is closely monitoring the currency movement.

The impact of the note ban, continued foreign outflows, a stronger dollar overseas and rising yields in the US continued to cast their shadow on the rupee.

The rupee had dropped 91 paise, or 1.34 per cent, in five trading days. The domestic unit was last seen at this level when it traded at 68.85 intraday and ended 68.80 on August 28, 2013.

It moved in a range of 68.58 and 68.86 during the day.

Foreign funds going on a selling spree from emerging markets on expectations of a rate hike next month by the US Fed and rupee volatility following the domestic demonetisation drive to curb black money added to the pressure, dealers said.

The dollar Index was trading lower by 0.20 per cent against a basket of six currencies.

In the overseas market, the dollar hovered near fresh 13-year highs on Thursday before backing down slightly after solid US economic indicators and Federal Reserve meeting minutes underpinned speculation for an interest rate rise.

Snapping its two-day rising trend, the Sensex slumped 192 points to finish below the 26,000-level due to profit-booking on the last day of November contracts and a fragile rupee, which hit record low against the dollar.

The Sensex resumed slightly lower at 26,049.14 and dropped further to 25,810.97 before ending at 25,860.17, showing a loss of 191.64 points or 0.74 per cent. The index had gained 286.67 points or 1.11 per cent in the previous two days.

The NSE 50-share Nifty too dropped by 67.80 points or 0.84 per cent to close below the crucial 8,000-level to 7,965.50.

It had gained 104.20 points or 1.31 per cent in two days.

“Continued weakness in rupee against dollar, last hour of expiry square-off and the disruptions in Rajya Sabha debate over demonetisation dragged the market,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.

BOX — Demonetisation to have positive impact on economy: Jaitley

New Delhi: Finance Minister Arun Jaitley on Thursday said the government’s demonetisation move is going to have “a positive impact on the economy, including GDP”.

“The steps that the government had taken were the right steps which were being implemented in the right manner. As far as the Indian economy is concerned, including on India’s GDP, it is going to be a positive impact,” the Minister told reporters in the Parliament House precincts while responding to queries over the impact of the government’s move to demonetise Rs500 and Rs1,000 currency notes.

Jaitley said there will be a positive impact “because a lot of money that operates in the shadowy economy will now become part of the banking structure” and banks “will have a lot more money to support the economy”.

The Finance Minister also said that “the private sector investors which were so far lacking will now get back into the economy”.

—IANS

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