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Rupee Plunges Below 50 Level After 30 Months; Down 21 Ps Vs Dollar

Mumbai, Oct 21: The rupee today closed below the psychological 50-level mark for the first time in the last two-and-a-half years against the US currency on sustained strong dollar demand and signs of fresh capital

India TV News Desk [ Updated: October 21, 2011 20:02 IST ]
rupee plunges below 50 level after 30 months down 21 ps vs
rupee plunges below 50 level after 30 months down 21 ps vs dollar

Mumbai, Oct 21: The rupee today closed below the psychological 50-level mark for the first time in the last two-and-a-half years against the US currency on sustained strong dollar demand and signs of fresh capital outflows.


At the Interbank Foreign Exchange (Forex) market, the rupee plunged to the level of 50.32 during intra-day tracking sluggish stock markets.

With the BSE benchmark Sensex recovering towards the end of the day, the local currecny also recovered some of the losses to settle at 50.01/02, down by 21 paise over the previous close. It had settled at 50.04/05 on April 29, 2009.

Meanwhile in New Delhi, Reserve Bank Governor D Subbarao met Finance Minister Pranab Mukherjee and discussed ways to deal with spiraling prices aggravated by a weak rupee.

Even as the rupee plunged to 30-month lows, dealers said there were no signs of RBI intervention in the market.

“There were no signs to believe that RBI has intervened in the market. There was not any excess selling of the dollar from any public sector bank which can indicate an indirect play by the central bank,” a dealer from a private wealth management firm said.

However, a treasury official from a public sector bank said, “I personally believe that there must be some intervention,” but added that the extent and amount of intervention is not known to the market.

The rupee moved in a range of 50.32 and 49.95 before settling at 50.01/02, showing a fall of 0.42 per cent.  Yesterday, it had tumbled by 65 paise or 1.32 per cent.

The BSE benchmark Sensex settled lower by 151.25 points or 0.89 per cent. According to the Sebi data, Foreign Institutional Investors pulled out USD 86.69 million yesterday.

The dollar index was down by 0.15 per cent against a basket of currencies ahead of the outcome of any move from European leaders to solve the euro-zone debt problems in the weekend summit. The New York crude oil was trading above USD 86 a barrel in European market today.

“Overall, I feel the rupee will keep depreciating against the dollar ... I see the rupee even touching Rs 53 to a dollar in a six month timeframe. Events in Europe is the factor to watch out for,” said Bitupan Majumdar, Lead Forex Derivatives Analyst at JRG wealth management.

Within India, pressure on the current account deficit and the excess outflows on the capital account front will keep pressure on the rupee, he added.

Alpari Financial Services (India) CEO Pramit Brahmbhatt said that next “resistance for rupee is at 50.50 and the trading range for the USD/INR will be 49.85 to 50.45”.

Abhishek Goenka, CEO, India Forex advisors said the trade deficit is expected to breach the budgetary target of 4.7 per cent of the Gross Domestic Product, mainly on account of rising oil prices and steep fall in the rupee.

The rupee premium for the forward dollar recovered modestly on stray paying pressure from banks and corporates.

The benchmark six-month forward dollar premium payable in March edged up to 91-1/2-93-1/2 paise from last close of 89-1/2-91-1/2 paise and far-forward contracts maturing in September ended a tad higher at 138-1/2-140-1/2 paise from 138-140 paise previously.

The Reserve Bank of India fixed the reference rate for the US dollar at Rs 50.0670 and for the euro at Rs 69.0350.

The rupee plunged further against the pound sterling to conclude at Rs 79.51/53 from last close of Rs 78.61/63 and also extended losses to close at Rs 69.02/04 per euro from Rs 68.67/69 previously. It too declined further against the Japanese yen to Rs 65.19/21 per 100 yen from its last close of Rs 64.84/86.

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