Rupee back on downward spiral

Loses 111 paise to close at 64.31

Rupee back on  downward spiral

The domestic currency rupee on Monday wiped out all its gains made on Friday last -- hitting an intraday low of 64.60 -- and lost 111 paise or 2.0 per cent to 64.31 against the US dollar in the closing on the back of heavy dollar demand from oil importers. 

The dollar-rupee pair made a high of 64.72 levels and a low of 63.64 levels this day.  It may be noted that Rupee on Friday last had overcome its 4-consecutive all-time  closing lows to settle at 63.20 in the closing.

During this day, the rupee was seen weakening due to continued dollar buying pressure in the local market and it was not getting any cues globally from the dollar index or euro which was trading flat. 

Commenting, Kotak Securities currency analyst Anindya Banerjee said, “Indian Rupee depreciated by around 2 per cent against dollar to trade at 64.50. Strong demand from US dollar from Indian corporates was enough to engulf supply US dollars from custodian banks. Rating agency Fitch’s warning on sovereign ratings also weighed on Rupee. Over the near-term a range of 63.50 to 65.00 could been seen, with demand for US dollar remaining strong at lower levels.”

Another brokerage house CLSA thinks rupee will resume depreciation after temporary respite.  It expects the rupee to weaken to 67 to 68 per dollar mark by the end of fiscal year 2014. It also sees the rupee heading to at least 70 to 72 per dollar mark by FY ’15.

Meanwhile on the equities front, key benchmark indices Sensex and Nifty -- after starting the week on a volatile note -- closed the session in green adding 39 points and 4 points to settle at 18,558 and 5,476 points respectively. Weak rupee seemed to have helped the IT stocks as Infosys was up by 1 per cent.  BHEL from the capital goods segment was one more stock which helped the markets to move higher as it was up by 7 per cent.

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