According to forex dealers, there were rumours that the Reserve Bank of India (RBI) is likely to allow oil marketing companies (OMCs) to meet their dollar requirements outside the spot foreign exchange market. The rupee tumbled across yet another psychological mark of 61 per dollar in intraday trade to recover with help of central bank intervention. According to forex dealers, there were rumours that the Reserve Bank of India (RBI) is likely to allow oil marketing companies (OMCs) to meet their dollar requirements outside the spot foreign exchange market. Typically, these companies suck out $300 million of forex daily. On Monday, the rupee closed at 60.62 per dollar, 38p or 0.6% lower than the previous close. The Indian currency fell to its lifetime intraday low of 61.21 against the greenback in early trade after which dollar inflows were seen coming from public sector banks on behalf of the RBI. A treasury head of a large private bank said no special dollar window had been activated yet. “The OMCs might have some reservations with price discovery while the RBI would be concerned about the quantum of dollar flows it might need to infuse in such a position. It would have severe impact on the pace of rupee depreciation.” Markets were also abuzz with rumours that the RBI has denied selling dollars to large public sector banks outside the forex market. Dealers said the RBI was in constant touch with market participants to keep a check on dollar demand. Foreign institutional investors (FIIs) were net sellers with `204 crore in Indian equity markets on Monday, according to Bombay Stock Exchange data. The rise in US Treasury Bond yields in response to better than expected jobs data has led to foreign fund outflows from Indian debt markets as well. Yields on the 10-year benchmark government bond was up 7 basis points to close at 7.57% on Monday. The rupee is expected to suffer more in case these outflows continue. According to Sugandha Sachdeva, assistant vice-president & incharge-currency research at Religare, rupee could fall to 63.5 per dollar in the near term. Indranil Sen Gupta, India economist at Bank of America Merrill Lynch said that rupee could fall to 62 per dollar once it breached 60 levels. Also, the RBI would find it difficult to sell beyond $30 billion, as a whole, with the import cover already halving to 7 months in 4 years, he said. The dollar index as measured against six major currencies of the world rose to 84.59 levels on Monday after closing at 84.45 last week.
Posted on: Tue, 09 Jul 2013 09:38:03 +0000
Trending Topics
Recently Viewed Topics
© 2015