The Indian rupee on Tuesday plummeted to 13-month low of 63.53 against dollar due to heavy demand for the U.S. currency from importers and some banks amid falling oil prices and chaos in stock markets.
Dealers in foreign exchange said the Reserve Bank may have intervened in the markets but it seemed dollars selling through State-ran banks did not pay off.
They also predicted that the rupee is likely to breach the 64-mark as early as tomorrow.
At the Interbank Foreign Exchange (Forex) market, the rupee commenced sluggish at 63.25 a dollar. Sustained capital outflows pulled it further down to a low of 63.59.
It finally ended the day at 63.53, a fall of 59 paise or 0.94 per cent. This is the worst single day loss for the domestic currency in more than four months.
The rupee had tumbled by 65 paise on Monday.
“The Reserve Bank was likely there in the market to smoothen the weakness. They came at 63.50 level. I think we are heading towards 64 level, which we may see tomorrow,” said a dealer with a state-run bank.
Meanwhile, Commerce Secretary Rajeev Kher said the government would get uncomfortable if the Indian currency stays for long at this point.
“The exchange price has come down to 63. As the Secretary of the Department of Commerce I feel that the rupee if it goes further down, or stays for too long at this point, it should give me a reason to feel a little concerned,” he said.
Weakness in financial markets abroad following continued downslide in global crude oil (Brent) prices below $60 a barrel amid fall in Chinese manufacturing data also put pressure on the local currency.
“There was a lot of selling in the market. Negative sentiments in stock markets and weak global cues impacted the rupee. Importers demand for dollars and a possible exit of FIIs weakened the currency. November trade deficit numbers added to gloom,” FirstRand Bank Treasurer Krishnamoorthy Harihar said.
“An array of factors are weighing on the Indian rupee. The IIP numbers came in at negative 4.2 per cent for November, and the trade deficit has widened to $16.86 billion ...,” said Sugandha Sachdeva, AVP & Incharge, Metals, Energy & Currency Research, Religare Securities.
Meanwhile, oil importers have been buying dollars heavily to benefit from low oil prices as crude continues to drift lower, he added.
Persistent capital outflows too weighed on the rupee while steep fall in U.S. dollar overseas could not impact rupee, a Forex dealer said.
Foreign portfolio investors pulled out $63.48 million yesterday, as per SEBI data.
Meanwhile, the benchmark BSE Sensex collapsed by 538 points or 1.97 per cent, completing four-session of losing string.
A gauge of six major global rivals, the dollar index was down by a sharp 0.53 per cent.
In forward market, premia recovered on fresh payments from banks and corporates.
The benchmark six-month premium payable in May ended at 202-204 paise from 201.5-203.5 paise previously. Forward contracts maturing in November 2015 settled at 407-409 paise.
The Reserve Bank of India fixed the reference rate for dollar at 63.41 and for the euro at 79.
The rupee plummeted further against the pound to 99.84 from Monday’s close of 98.61 and also dived to 79.47 per euro from 78.223.
It declined to 54.64 per 100 Japanese yen from 53.05.
