The rupee fell to an intra-day low of 57.2 against the greenback on month-end dollar demand from oil companies. However, dollar sales from the central bank and exporters helped the currency close at 57.03 per dollar, a paisa more than yesterday’s close.
Traders said the Reserve Bank of India (RBI) intervened on a couple of occasions, with dollar sales of $200-300 million on Tuesday. Also, a few large exporters were seen taking advantage of the weak levels. Last week, the rupee had recorded an all-time intra-day low of 57.33 and a closing low of 57.16 against the greenback.
“A strong rebound in the dollar on account of global risk aversion also pressurised the rupee,” said India Forex Advisors. The dollar index against six major global currencies was at 82.57 on Tuesday, as compared with 82.49 yesterday.
There were net foreign fund inflows of just about Rs 13 crore in the Indian equity markets on Tuesday, according to the Bombay Stock Exchange. Its benchmark index, the Sensex, and the corresponding Nifty on the National Stock Exchange ended on Tuesday with 0.1 per cent gains.
The measures taken by RBI yesterday failed to assure markets of any immediate respite. “The lack of confidence and no clear bottoming-out signal is delaying a shift for the forward market into a supply-driven mode, despite a highly devalued rupee; exporters need to get the fear of a sharp reversal in the rupee into 54-52 to open the floodgate for dollar supplies,” said Moses Harding, head of market research at IndusInd Bank. Market participants said the measures might only help in the long run. Yesterday, RBI increased the foreign investment limit in government bonds from $15 billion to $20 billion, and reduced the minimum residual period from five years to three years.
The central bank also allowed foreign exchange earning companies from the manufacturing and infrastructure sectors to borrow funds via external commercial borrowing.
So far this month, the rupee has lost 1.4 per cent against the dollar. Sandeep Gonsalves, forex consultant and dealer with Mecklai & Mecklai, expects it to trade within 56.9-57.3 towards the end of this month.
The markets are expected to be volatile, as banks unwind their futures currency trading limits to fall in line with the new RBI norms. The central bank’s deadline for this is Saturday.
