Rupee is seen crossing 70 a dollar in four months

The Indian rupee has inched towards its record low of 68.91 a dollar in the one month rate segment in the non-deliverable offshore market.

The rupee closed at 68.61 a dollar in the onshore Indian spot market and in the offshore market also, the spot rate remained in and around the same level. However, the offshore traders are expecting the rupee to breach its record low of 68.87 a dollar, hit on August 27, 2013, in the Indian market.

However, currency analysts pointed out, the expectation could be nothing more than how the forward rates are calculated.

The forward premium is currently at 6.5 to seven per cent.
 

MELTING DOWN

• The Indian rupee has inched towards its record low of 68.91 a dollar in the one month rate segment in the non-deliverable offshore market
   
• The rupee closed at 68.61 a dollar in the onshore Indian spot market and in the offshore market also, the spot rate remained in and around the same level
   
• However, the offshore traders are expecting the rupee to breach its record low of 68.87 a dollar, hit on August 27, 2013, in the Indian market
   
• However, currency analysts pointed out, the expectation could be nothing more than how the forward rates are calculated
  

 

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Adding one month’s forward premium, the dollar-rupee exchange rate crosses the record low of rupee. Going by the same calculation, rupee is seen crossing Rs 70 in four months.  

The rupee dropped on renewed demand for the American currency from banks and importers on the back of higher greenback abroad amid sustained foreign capital outflows.

Even the persistent rise in equity market failed to restrict the rupee's fall, a foreign-exchange dealer said.

It hovered in a range of 68.70 and 68.50 during the day.

The dollar index was up by 0.53 per cent against a basket of six currencies in the late afternoon trade.

The yen was weaker against its rivals during Asian trade on Monday, as investors opted to sell the safety of the Japanese currency amid Tokyo stocks' steady gains.

Oil prices recovered in Asia today after a steep fall in the previous session, with the US crude oil back above $30 a barrel as traders mulled the impact of a potential freeze by key producers. Pramit Brahmbhatt of Veracity Financial Services said, "The rupee started on a negative note and we saw the rupee depreciating as day progressed thus by strengthening the dollar.

Despite positive cues from the domestic equity market, where Nifty gained 24 points, a surprising rally in the dollar kept the rupee under pressure.

Thus, to end the day, rupee closed with a loss of 15 paise at 68.61 levels.

Trading range for the spot dollar/rupee pair is expected to be within 68.20 to 68.80 levels.

Meanwhile, the benchmark Sensex ended higher by 79.64 points or 0.34 per cent.

In the forward market, the premium for dollar firmed up further on sustained paying pressure from companies.

The benchmark six-month premium July contract moved up to 196-201 paise from the last weekend's level of 196-198 paise and far forward January 2017 contract also moved up further to 422-424 paise from 416.5-418.5 paise previously.

The RBI (Reserve Bank of India) fixed the reference rate for the dollar at 68.5517 and for the euro at 76.1952.

In cross-currency trades, the rupee recovered sharply against the pound sterling to end at 96.97 from 98.34 on last Thursday and also firmed up against the euro at 75.85 as against 76.08 previously.

However, the home unit dropped against the yen to finish at 60.54 per 100 yen from 60.13.