Forex dealers said intense dollar demand from banks and importers, mainly oil refiners, in view of higher dollar overseas affected the rupee value against the dollar, despite RBI steps last week to stem the fall of the local unit.
The Inter-bank Foreign Exchange market was abuzz with speculation of Reserve Bank intervention. When contacted, T S Srinivasan, GM (Treasury) of Indian Overseas Bank said, the central bank was believed to have intervened initially in the market today.
"Announcement of open market operation (OMO) today by the RBI indicates that it will intervene in the market in the near future. I think it is likely to intervene tomorrow," he added.
IDBI Bank Treasury Head N S Venkatesh said the rupee slide was mainly due to continuing uncertainty in the euro-zone, which prompted strengthening of dollar against the euro. "Also, risk aversion mode is another contributing factor for the fall," he added.
The rupee resumed lower and dropped further to end at all-time closing low of 53.96 per dollar, showing a loss of 33 paise after inflation rising to 7.23 per cent in April dampened investor sentiment.
Srinivasan said, "Fundamentals continue to be bad for the domestic currency. Also, inflation data further dampened the sentiment."
Euro fell to 1.2868 from 1.2925 late Friday in New York. The dollar rose to 80.05 yen from 79.90.
In London, Sterling hit a three-week low against the dollar today as political deadlock in Greece curbed investor appetite for risk and fed safe-haven demand for the greenback. (MORE)
