Our Bureau/PTI Mumbai, Aug 27
The rupee slumped by 120 paise at 65.50 against the dollar at 11.32 a.m. local time on strong month-end dollar demand from banks and oil importers and a weak trend in the domestic equity market. It moved in a range of 65.00 and 65.71 per dollar in the morning deals. The rupee breached 65-level mark against the dollar in the opening trade by plunging 104 paise to 65.34, not far from its all-time low of 65.56 reached last week.
The rupee had ended the previous session with a steep fall of 110 paise to 64.30 against the dollar. Persistent month-end dollar demand from importers mainly oil refiners amid sustained foreign capital outflows from the equity market pulled down the rupee value, a forex dealer said. In the global market, the US dollar slipped against the euro and the Japanese yen in their early trade as concerns about possible US military action against Syria added to existing uncertainty over Federal Reserve policy.
The rupee has lost close to 15 per cent versus the dollar, hitting record lows, since the US Federal Reserve hinted in May that it would soon begin scaling back its massive economic stimulus programme. The US Fed's indicators sparked an investor exodus from Emerging Markets, which had led up to a rapid depreciation of these currencies. However, a few market participants are optimistic about the prospects of the currency unit in the days ahead.
According to an RBS report, “The measures taken so far and other impending developments suggest a more stable currency over the next three to four months. We expect USD/INR to grind towards 59 over the next 12 months.”
Call rates, G-Secs
The inter-bank call money rate, the rate at which banks borrow from each other for short-term funding, opened higher at 10.25 per cent from the previous close of 10.20 per cent. The 7.16 per cent government security, which matures in 2023, opened higher at Rs 92.5 from the previous close of Rs 92.23. Yields on the security softened to 8.29 per cent from the previous close of 8.34 per cent. (Source: The Hindu Businessline)