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After five consecutive session of strengthening, rupee weakened on Thursday as dollar demand from oil importers and defence-related payment by the government put pressure on the currency. Profit booking by equity market investors also exerted pressure on the currency.
The rupee ended at 63.54 compared with the previous close of 63.37 per dollar. It had opened at 63.25 and during intra-day trades touched a high of 62.92 and a low of 63.96. This was the first session when the rupee ended on a weaker note after Raghuram Rajan took charge as the Reserve Bank of India governor.
Rupee had closed at 67.73 against the greenback on September 3 and thereafter, it appreciated to 63.37 on Wednesday. The rupee has weakened by a little over 17 per cent since the start of this financial year.
According to Mohan Shenoi, president (group treasury and global markets) at Kotak Mahindra Bank, the flows could start from the next week itself. “The rupee may not strengthen beyond 62.50 (against the dollar) and may not weaken beyond 66. Developments on US tapering and their impact on emerging market currencies, the mid-quarter review of RBI and month-end dollar demand by importers will have an impact on the rupee,” said Shenoi.
According to dealers, RBI intervened to support the rupee as it approached 64 against the dollar.
“The steps announced by Rajan to attract flows are basically for giving time to the government to take steps and ease the bottlenecks by way of completing the projects which are stuck. In the near term, I expect the rupee to trade in the range of 63-65 per dollar,” said Harding.
Two recent moves of RBI — offering a window to banks to swap fresh foreign currency non-resident (banks) dollar funds and raising banks’ overseas borrowing limit of unimpaired Tier-I capital from 50 per cent to 100 per cent — are expected to attract dollar inflows into the country.
