Mumbai: The rupee touched a three-week low of 46.43 against the dollar on Wednesday, as stock markets fell and the dollar strengthened against other currencies.
There was also demand for dollars from oil importers who were settling their month-end bills. The rupee touched a level as high as 46.42 against the dollar, during the intra-day trade, closed at 46.37. It had ended at 46.1250/1350 per dollar on Monday. Markets were shut on Tuesday for a public holiday.
Dealers noted that in the short term, the rupee was poised for a further weakening against the dollar.
“In the very short term due to a combination of factors like the dollar strengthening against major currencies, a sell-off in equities and uncertainty over the credit policy, we will see the rupee further weakening towards 47 to a dollar,” said RK Gurumurthy, head of trading, financial markets at ING Vysya Bank.
J Moses Harding, head of global markets group at IndusInd Bank, who expects the rupee to trade in the range of 46-46.50 for the short term, too noted that the Indian currency is under pressure taking cues from the global developments.
“We will have to see how the dollar behaves against other currencies. There has been a correction in the domestic stock markets. Today, importers were seen buying dollars today,” said Moses. The dollar index against other major currencies was up 0.3%.
According to the weekly statistical supplement released by the central bank on Friday, foreign exchange reserves rose for a third straight week to $285.2 billion, an increase of $899 million for the week ending January 15. Total reserves have jumped by $33 billion in the last one year, the RBI said.
The stock markets extended its longest string of losses in three months on concerns that the Reserve Bank of India (RBI) will raise the cash reserve ratio—the proportion of net demand and time liabilities that banks are expected to maintain as cash with the central bank--by at least 50 basis points, during the monetary policy scheduled on January 29.On Wednesday, the 30-share Sensex of Bombay Stock Exchange was down by 490.64 points or 2.92% to end the day at 16,289 points.
Source : Financial Express