After going as high as 49.88 per dollar, the rupee has managed to pick up in trade today, reports CNBC-TV18’s Latha Venkatesh. The rupee, which opened on a weak note today, fell further after deputy governor of the RBI Dr Subir Gokarn said that people should get used to the rupee’s float and that corporates have to learn to price in currency fluctuation. This statement further discouraged those investors who were hoping for RBI to intervene in the foreign exchange market. (Click here for the full interview)
But a turn of events came post noon, when the rupee moved from around 49.65 at noon to 49.10. While the belief is that the positive opening in Europe helped the rupee pick itself up, some say that the RBI may have intervened because such an appreciation occurs only when somebody comes and really supplies dollars. So once again we are seeing people coming in to cover their dollar shorts.
For the moment, things may have smoothened out in the currency space. But the RBI has clearly said they will only control volatility and not the direction of the rupee. So there is a sense that they will allow it to float and come only when things are volatile. With the drastic cuts seen on all asset markets, there are still enough reasons to expect that the rupee will fall.
