No end to rupee woes; closes at 54.47

A day after closing at a record low of 54.50 against the dollar, the rupee on Thursday slid further to 54.60 intra-day as capital outflows continued but suspected Reserve Bank of India intervention cushioned against a steeper fall and it closed at 54.47.

A positive close in Indian stocks and fresh dollar selling by exporters at higher levels also helped the rupee to remain somewhat stable near its overnight close, forex dealers said.

At the forex market, the domestic unit on Thursday resumed higher at 54.40 a dollar.

However, fall in stocks amid dollar demand, later pushed the rupee to an all-time low of 54.60.

Dealers said a fall in the New York crude oil prices to nearly six-month low below $93 triggered a demand for dollars.

RBI too believed to have intervened helping the domestic currency close at 54.47.

"Towards the end of the session, we saw some dollar selling by the central bank, which supported rupee," said Viral Shah, Head -- Institutional Business, Geojit Comtrade.

On Wednesday, the rupee had tumbled by 70 paise or 1.30 per cent to record its lowest close as RBI action to control the domestic unit's fall proved futile.

"Unless Euro strengthens against dollar with credible solution of Eurozone problems, especially Greece, rupee is less likely to appreciate," Moses Harding, Head - ALCO and Economic Market Research, IndusInd Bank said.

The BSE benchmark Sensex, which dropped nearly 300 points on Wednesday, was up by over 210 points in late morning trade and finally closed 40 points higher on Thursday.

Abhishek Goenka, CEO, India Forex Advisors said: "the rupee is steadily weakening against the dollar, making a new low every day against the dollar. We can see a slight correction in rupee, if RBI and the Central Government takes the charge to support it."

According to Arvind Chari, fund manager (debt), Quantum AMC, while from an foreign investors perspective a depreciating currency is an irritant leading to fall in their overall returns but from a macro economic perspective, India needed the depreciation to rebalance the external account.

"High domestic inflation has eroded competitiveness impacting exports and government apathy has resulted in little fresh capacities increasing import dependence... the rupee needed to depreciate to address this imbalance," he added.

The rupee has fallen over 6 per cent in this quarter making it amongst the worst-performing currencies in Asia.

Meanwhile, the dollar extended its rally for the 13-session and its index was up by nearly 0.3 per cent against a basket of currencies.

The dollar index which climbed back to its high is expected to be resisted at 81.70 -- 81.80 levels hitting its previous top and a retreat from there can be expected, he added.

The rupee premium for the forward dollar dropped on fresh receiving by exporters.

The benchmark six-month forward dollar premium payable in October settled weak at 151-153 paise from 158-160 paise on Wednesday and far-forward contracts maturing in April also closed lower at 262-264 paise from 272-274 paise.

The RBI fixed the reference rate for the dollar at 54.3875 and for Euro at 69.3003.

The rupee recovered smartly to 86.24 against the pound sterling from 86.82 and also firmed up against the Euro to 69.05 from overnight close of 69.32.

It, however, declined further against the Japanese yen to 67.92 per 100 yen from last close of 67.71.

Share your ideas on how the rupee can be saved. See what others have to say.