MUMBAI, June 18, 2013 – Resuming its slide, the Indian rupee today sank by a whopping 90 paise to all-time closing low of 58.77 on massive dollar buying by banks and importers as forex markets became jittery ahead of US Fed’s decision on continuing monetary stimulus.
Capital outflows also affected the market sentiment with FIIs offloading shares worth over Rs 750 crore in two days, amid talks of continuing sell-off in debt as well. Since May-end, FIIs have sold around USD 5 billion debt securities.
“Forex markets were nervous ahead of the Fed meeting. More than demand and supply, the sentiment was very poor. The decision of whether Fed will taper bond-buying will only be known on Wednesday…. Its not right time for RBI to intervene as the trend is bearish,” said Mohan Shenoi, President – Group Treasury & Global Markets, Kotak Mahindra Bank.
Indian rupee resumed lower at 58.25 per dollar as against the last closing level of 57.87 per dollar at the Interbank Foreign Exchange Market. It dropped further to a low of 58.81 on concern that US Federal Reserve will indicate a reduction in asset purchases that boosted inflows to emerging markets.
Indian rupee finally ended at 58.77 per dollar, showing a loss of 90 paise or 1.56 per cent. On June 11, the rupee hit its all-time low of 58.98/99 intra-day but closed at 58.39.
Local factors like poor trade data also affected rupee today. “Depreciation is mainly due to concerns of high CAD. Also, widening trade deficit data for May had