ET:Rupee falls by 32 paise as oil companies buy dollars
MUMBAI: The rupee fell to an over two-month low of 55.59 on heavy dollar demand from oil marketing companies and corporates and despite the central bank having sold dollars in the market, said forex dealers.
The local unit eventually ended 0.58% lower at 55.52 to the dollar, its fourth straight fall over as many sessions. Despite RBI's intervention, the local currency weakened by 32 paise from its previous close. RBI is believed to have sold dollars at the 55.50, according to forex dealers, who added that RBI offloaded $150-200 million at this level.
"Apart from OMCs, demand for dollar is coming from corporates as the FCCB repayment dates are approaching," said a dealer of a public sector bank. "FII inflows have also dried up, leading to decline in the Indian rupee."
Dealers expect the rupee to trade in a 55.50-56.10 over the next few days. A widening trade deficit, poor IIP numbers and high inflation have put pressure on the local unit. Currency dealers are pinning hopes on the passage of key reforms like amendment to the Insurance Act and passage of the Pension Act which could ease pressure on the rupee.
"With month-end dollar demand still going through, the pressure is on the rupee to weaken. However, the market will be cautious of intervention from the central bank," said Vikas Babu Chittiprolu, a senior forex dealer with Andhra Bank.
