Rupee seen heading to 62/dollar despite RBI intervention

Drop in exports, expectations of more curbs on gold imports to drag rupee

The rupee is seen heading to 62 a dollar due to dollar demand from oil marketing companies and importers. 

 

According to currency dealers, the 62 level may be touched anytime despite presence of the Reserve Bank of India (RBI) in the currency market.

 

“RBI has been present in the market else by now the rupee would have touched 62 already,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai. Today the rupee opened at 61.80 and currently it is trading at 61.83.

There are concerns due to drop in exports.

 

Latest data showed that merchandise exports fell 5.04% to $26.09 billion in October from $27.48 billion a year earlier. The fall in exports, the first this financial year, comes at a time when the government is pushing policy measures, as well as campaigns such as ‘Make in India’. The government may announce further restrictions on gold imports soon to discourage shipments, which had surged in October.

 

Current account deficit (CAD) for this financial year’s first quarter, April to June, narrowed sharply to 1.7% of gross domestic product ($7.8 billion) from 4.8% of GDP ($21.8 bn) in the corresponding period of 2013-14.

 

Thought the situation of the rupee is much better than what it was in 2013, there are concerns that the US Fed’s rate hikes expected in 2015 will lead to its volatility as foreign investors may starting pulling out from the Indian market.