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The rupee once again breached the 64 mark today due to foreign investors exiting from domestic markets and dollar demand by corporates. The bias for the rupee is seen towards weakening as experts believe the outflows from domestic markets may continue.
The rupee had opened at 64.12 and during the day it touched a high of 64.12 and a low of 64.27 before closing at 64.17 per dollar, weaker by 31 paise compared with previous close of 63.86 per dollar. The rupee had closed breaching the 64 mark even last Thursday at 64.24 per dollar.
“The rupee weakened due to dollar demand from foreign banks. Foreign banks were buying as there were outflows from domestic markets. There was also dollar demand by corporates due to which nationalised banks were buying. The bias for the rupee is towards further weakening in this week as outflows from domestic markets may continue,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
Gonsalves sees the rupee trading in the range of 64 to 64.50 in the next few days. Since the start of 2015 the rupee has weakened by nearly 2% and experts believe it is heading toward 65.
“The rupee depreciated against the dollar amid fears of further fund outflows from the country. Reports of importers covering their positions emerged as they expect the currency to weaken further against the dollar tracking the global selloff in the debt market,” said Suresh Nair, director at Admisi Forex.
Experts are in the process of revising their year-end forecast for the rupee against the dollar. On Tuesday HSBC revised the year-end forecast slightly higher to 66, from 63.50 earlier.
“We believe the Reserve Bank of India (RBI) is still looking to increase its reserve adequacy, which is in fact, rather low when scaled by Gross Domestic Product (GDP) and the accumulated amount of portfolio inflows over recent years. It sees a window of opportunity, while the current account funding gap is small and ahead of potential global headwinds from the expected tightening of monetary policy by the Fed,” said HSBC in a note to clients.
RBI's foreign exchange reserves grew by a whopping $7.26 billion for the week ended May 1 and touched yet another all time high, latest data released by Reserve Bank of India (RBI) showed on Friday.
