Rupee slumps to new low of 56.22 on Greece woes

RBI's multiple attempts to prop up the currency did not have much impact with fund outflows intensifying

The rupee slumped to a fresh low of 56.22 today but closed at 56 against the dollar, extending its losses for the sixth day as RBI's multiple attempts to prop up the currency did not have the much impact with fund outflows intensifying on renewed Greece concerns.

At the Interbank Foreign Exchange (Forex) market, the domestic unit opened weak at 55.65 a dollar from previous close of 55.39 and immediately touched a high of 55.52.

However, heavy dollar demand from importers and some corporates pushed the rupee down wards to log a life-time low of 56.22 amid the US currency gaining strength against its major rivals as investors were spooked by renewed fears that Greece would exit Euro bloc. Euro hit a 20-month low ahead of a informal EU summit later today.

Forex dealers said the rupee recovered some ground on multiple interventions by the apex bank to end at 56--a record low at close. The currency has lost a whopping 150 paise in three straight sessions. Apart from interventions, RBI has announced several measures in the last one week, including capping limits on currency F&O, to stem rupee's free fall.    

"There was selling of dollars from the public sector banks. So, the central bank could have intervened through this route," said N S Venkatesh, Head of Treasury, IDBI Bank.

Some experts, however, feel the rupee's slide could be finally coming to an end.

"...I feel that we are at the last lap of a bearish trend and the currency will appreciate from these levels," said Moses Harding, Head - ALCO and Economic & Market Research, IndusInd Bank.

However, if the Euro crisis accelerates further, there could be further pressure coming on rupee, making it touch a new low of 56.50 levels, said Abhishek Goenka, CEO, India Forex Advisors.

Meanwhile, the benchmark Sensex today closed down by 78.31 points or 0.49%.