Rupee hits all-time low of 56.57; RBI intervenes to stem slide

Lesser-than-expected aggressive measures by US Federal Reserve, weak economic Chinese data and a fall in the dollar's main rival euro ahead of an audit of Spanish banks, helped the American currency rise and sentiment was against the rupee right from the outset.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed weak at 56.35 a dollar as against last close of 56.15. Month-end dollar demand from importers, mainly oil refiners, to meet their requirements, put more pressure on rupee as Brent crude hit a 18-month low of USD 91 per barrel.

This pushed the rupee to a record low 56.57 (intra-day), eclipsing the previous low of 56.52 registered on May 31.

However, intervention by the Reserve Bank and a late rally in Indian stocks helped the rupee finally close at 56.30, down 0.27 per cent. This closing value is also the weakest for the currency, lower than the 56.23 hit on May 30.

"There was intervention by the RBI during end of the session after rupee breached Rs 56.40 level. However, if the domestic currency doesn't close above Rs 56.50 level, it will recoup to Rs 55.80 level in near-term," said Hemal Doshi, Currency Strategist, Geojit Comtrade.

The rupee has fallen by 90 paise or 1.62 per cent in four consecutive days amid worries over country's economic health.

A treasury official of a public sector bank said going ahead, the RBI's ability to intervene will be less till June end due to tight liquidity in the system.

"The burden of huge debt payment will continue to boost dollar demand and we target rupee moving ahead to 57.50-58," said Abhishek Goenka, Founder & CEO, India Forex Advisors.

Meanwhile, the stock market benchmark BSE Sensex today closed above 17,000-level for the first time in seven weeks. (MORE)