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The rupee weakened further on Friday due to month-end dollar demand. Besides that Foreign Institutional Investors (FIIs) who pulled out of domestic markets added to weakening trend.
The rupee ended at Rs 56.51, almost near one-year low on Friday compared with previous close of Rs 56.38 per dollar. The rupee had ended at Rs 56.81 per dollar on June 28 last calendar year.
During the day it touched a high of Rs 56.40 and a low of Rs 56.76.
"After the Gross Domestic Product (GDP) data came today equity markets turned bearish due to which FIIs withdrew their investments. Besides that there was month-end dollar demand,” said S Srinivasaraghavan, executive vice president and head- treasury of Dhanlaxmi Bank.
GDP growth slowed to 4.8% in the January-March quarter and fell to a decade’s low of 5% for the entire 2012-13 fiscal.
According to currency dealers during the last few hours of trading on Friday state-run banks bought dollar in order to meet the demand of oil importers due to which sentiments were dampened. Since the start of this fiscal the rupee has weakened by 4.13%.
“Throughout the week we saw the rupee weakening against the dollar and surpassing the key levels of Rs 56-56.20 as per our expectations. Thursday, the RBI’s reality check on the inflation and current account deficit jolted the sentiment of the investors on the rupee,” said Abhishek Goenka, founder & CEO, India Forex Advisors.
Goenka added that he maintains a bearish bias on rupee and expect it to move towards Rs 57-58 levels.
But currency traders are also of the view that for a brief period the rupee will strengthen. The rupee may strengthen from here as month-end dollar demand is over and exporters will be selling dollars at these levels, said a currency dealer with a public sector bank.
