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Rupee cracks to 2016-low on funds exodus; ends at 68.76

Massive funds outflows in the wake of impending US Fed rate hike and a bullish dollar overseas have hit the rupee sentiment

Press Trust of India  |  Mumbai 

A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu (Photo: Reuters)
A cashier displays the new 2000 Indian rupee banknotes inside a bank in Jammu (Photo: Reuters)

The on Monday tumbled by 30 paise to end at a fresh 2016 low of 68.76, due to deteriorating sentiment in the midst of worsening impact of fund outflows. Frantic demand from corporates along with aggressive hedging strategy adopted by importers in the wake of predominately took a toll on domestic unit, despite moves by the central bank to stabilise the currency. Massive funds outflows in the wake of impending rate hike and a bullish overseas have hit the sentiment, a dealer commented. Ongoing redemption pressure on foreign currency non-resident (FCNR) deposits also aided to the woes, the dealer said further. At the Interbank Foreign Exchange (Forex) market, the local unit opened modestly higher at 68.42 from last Friday's closing value of 68.46. However, the initial positive momentum failed to gain ground with the currency retreating sharply to hit a intraday low of 68.80 before ending at 68.76 - its lowest closing level so far this year - showing a steep loss of 30 paise, 0.44 per cent. The has shed 3.95 per cent of its value since the beginning of 2016. The had plunged to a record low of 68.8650 in day trade last Thursday before recovering on RBI intervention to settle at 68.74 -- the lowest level in 39 months. It had closed at a record low of 68.80 on August 28, 2013 impacted by the so-called taper tantrum after the Fed's signal to end its unprecedented bond purchases. Foreign investors have pulled out close to $5 billion from the capital markets in November so far amid concerns over the impact of demonetisation coupled with fears of rate hike by the US Federal Reserve. In worldwide trade, the greenback fell back modestly against all its major rivals at the beginning of the week after its longest winning streak in three years. The has strengthened nearly 6 per cent so far this month after the US presidential election outcome as markets speculated buoyant fiscal stimulus to boost economy that will boost inflation and aggressive Fed rate hike cycle. The US index was quoted higher at 101.51 in late afternoon. Meanwhile, RBI on Monday fixed the reference rate for the at 68.7235 and euro at 73.1768.

First Published: Mon, November 28 2016. 18:42 IST