Re weakens below 57-mark; lowest closing since 2012

Re weakens below 57-mark; lowest closing since 2012

RBI will intervene only to curb volatility

Re weakens below 57-mark; lowest closing since 2012

 The rupee on Friday breached the 57 mark to close at 57.06 a dollar in the local market for the first time since June 27 last year as demand for the greenback continued unabated.

With this, the rupee headed towards another all-time low this month as demand for the greenback from oil importers continues, forex traders said. 

In the afternoon, the rupee was quoting at Rs 57.06 against the dollar compared to its previous close of 56.85. The local currency has weakened more than 5.5 per cent against the dollar since the beginning of May. The rupee is now close to its all time record low 57.33 hit intra-day on June 22 last year.

The street is expecting that the rupee may touch a new all-time low soon as the RBI intervention may not happen. In this context, India Forex Advisors' CEO Abhishek Goenka in a report said, “The RBI would not like to sell dollars due to the country’s unhealthy reserves position and aggressive buying will also not take place due to lack of robust inflows and the high cost of infusing liquidity.”

Meanwhile, the RBI Governor D Subbarao said on Friday that it is not targeting any exchange rate but will intervene in the forex markets only to curb volatility and prevent disruption of macroeconomic stability.

"In India, the RBI does not target any exchange rate. We intervene in the foreign exchange market only to manage the volatility and to manage the disruption to the macro economic situation," he said while delivering a lecture organised by the Institute of Public Enterprise, Hyderabad.

On India’s widening current account deficit (CAD), Subbarao said there are three concerns - quantum of CAD, quality of CAD and financing the CAD.The increase in the deficit above the sustainable levels year-on-year is certainly going to add the pressure, he said.