Rupee at lowest in more than 2 years
The rupee ended weaker, on Wednesday, after dropping to its lowest level in over two years as investors reduced their exposure to risk ahead of the Federal Reserve’s policy meeting, where it is expected to unveil steps to revive a flagging US economy.
A wobbly euro and choppy domestic equities, which slipped 0.2 per cent in choppy trade, added to the rupee’s woes, traders said. The Fed is expected to announce plans to rebalance its portfolio in favour of longer-dated bonds and so push long-term interest rates — already near historic lows — even lower in a move known as Operation Twist.
The partially convertible rupee ended at 48.325/335 per dollar, 0.58 per cent weaker than Tuesday’s close of 48.05/06 and after touching 48.34 intraday — its weakest since September 16, 2009.
Worries over trajectory of global growth have already risen a notch after the minutes of Bank of England’s September meeting showed that most policymakers believed stresses of the past month had strengthened the case for an “immediate” return to the policy of quantitative easing, traders said.
The rupee had opened stronger at 47.99 and risen to 47.8375 driven primarily on expectation of robust dollar inflows, traders said.
“Lot many short dollar positions which had been initiated on hope of inflows, but these were scaled back after the flows were not high as expected,” said a foreign exchange dealer at a private sector bank.
Foreign funds have bought $416 million rupees of local shares so far this year after having sold over $2.2 billion in the previous month. So far this year, the rupee has weakened by more than 7 per cent against the greenback and is the worst performer among major Asian peers.
Intervention needed
Eyeing the increase in risks from exchange rate volatility and rise in imported inflation, the Reserve Bank of India needs to intervene more actively in the country’s forex market said Standard Chartered Bank in a research note on Wednesday. The central bank, in its mid-quarter policy review last Friday, said that the rupee’s depreciation may have adverse implications for inflation.
The euro was at $1.3652 after touching a high of $1.3723 earlier. It had been $1.3682 at the end of the rupee trade on Tuesday. The index of the dollar against six major currencies was 77.248 points from 77.105 previously.
The one-month onshore forward premium was at 17.50 points from 17.25 points on Tuesday, the three-month was at 50.25 points from 49.25 and the one-year was at 114.75 points steady from previous close. The one-month offshore non-deliverable forward contracts were quoted at 48.63, weaker than the onshore spot rate.
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 ended at 48.3975, 48.3900 and 48.4075 respectively. The total volume was $8.07 billion.
Comments on this Article | |
James Fernandes, Barkur/Chicago | Fri, September-23-2011, 2:51 |
Today; 22nd Sept; a dollar can fetch Rs.49.57
This site can convert values:
http://www.x-rates.com/calculator.html
"Mudige ippath rupai; adige maado dodda appai; Chakrakke ippatthu bangdy." Good old days; right? anybody remembers? Don’t bother.... Agree[0]
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