Re sinks to 61/dollar

Re sinks to 61/dollar

Re sinks to 61/dollar

Rupee on Monday breached the 61 mark and touched a record low of 61.20 a dollar in the morning trade, down by 97 paise compared to Friday’s closing of 60.22 per dollar, and closed at 60.62 levels. 

Forex traders were apprehensive of US Fed tapering off quantitative easing (QE3) earlier on strong jobs data that will put pressure on all currencies against dollar. On the local front, they maintained that docile RBI and government actions have ruined the situation.

Sentiment over emerging Asia was also hit by China’s plan to choke off credit to force consolidation in industries plagued by overcapacity as it seeks to end the economy’s reliance on investment funded by cheap debt.

Ashutosh Raina of HDFC Bank says: “When there are exaggerated moves, the RBI usually steps in. So, we will have to keep our fingers crossed because today we can see fairly good amount of depreciation happening in the rupee.”

Abhishek Goenka of India Forex Advisors said: "....the recent RBI statement that it would not defend any particular exchange rate added to the woes of the Rupee and crushed the investors hopes for any intervention by the RBI to support the dwindling Rupee. Technically the levels seen on top is 61.20  and if the market continues to sustain above it then we could see a fresh deterioration coming up in the pair."

Goenka further pointed out there are too many noises in the market adding: "All the negative cards are open, nothing much has left. We have to be very cautious to catch the further move in rupee as any reversal supported by any policy measure could fool the players going long on dollar.”

The dollar hit a fresh three-year high against a basket of major currencies as market expectations grew that the Fed will scale back stimulus as early as September following solid jobs growth.

The rupee fell to an all-time low of 61.21 per dollar, forcing the RBI to intervene for stabilising the currency. India is vulnerable to the sea-change in capital flows as it needs inflows to fund its big current account deficit.

Meanwhile, the Singapore dollar hit a 13-month low against the greenback, while the Thai baht touched an 11-month trough. Further, Asian financial markets suffered after US non-farm payroll data that showed 1,95,000 jobs were created last month, better than the 165,000 expected.