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The rupee saw its biggest decline in a month on Monday as traders covered short dollar positions ahead of the swearing in ceremony of Prime Minister-designate Narendra Modi, with all eyes set on the allocation of key portfolios. According to currency dealers the Reserve Bank of India (RBI) too was present in the market and Foreign Institutional investors (FIIs) were selling their investments in stocks.
The rupee ended at Rs 58.72 compared with previous close of Rs 58.51 per dollar. The rupee had opened at Rs 58.47 and during intra-day trades it touched a high of Rs 58.41 and a low of Rs 58.94 per dollar.
“The weakness was due to the Reserve Bank of India's (RBI) intervention through state-run banks and Foreign Institutional Investors (FIIs) selling their investments in stocks,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
Indian shares ended flat in a volatile session, giving up earlier gains of nearly 2% due to profit-taking in blue-chips such as IDFC while caution ahead of Modi's ministerial appointments also weighed.
Dealers said the central bank was spotted buying dollars via state-run banks after the rupee touched session highs while it was also actively intervening in the forwards market.
"We could see the pair target a high of 59.27-30 levels this week. We have the GDP data this week, but that is likely to be ignored. Market will be watching Modi and his team for cues," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.
