TH:Re trading weak at 61.05 on dollar demand, global cues
After hitting an all-time low of 61.19 in the early trade on Monday, the rupee was still trading weak at 61.05 at 2.05 p.m. local time.
The rupee breached the 61-level mark due to weakness in the domestic equity market and high demand for dollar from importers.
The rupee weakened by 65 paise to an all-time low of 60.87 against the dollar in the opening trade on Monday against the previous close of 60.22.
Previously, the unit had touched an all-time low of 60.76 against the dollar on June 26.
“The rupee was under pressure on account of dollar demand from importers and global factors such as the dollar index, which was seen trading above its one-month high, and in tune with the pressure on emerging market currencies,” said Hariprasad M.P., Head-Treasury, CentrumDirect.
Rupee exchange target
Last week, RBI Governor D. Subbarao had said that the Reserve Bank did not have a target for the rupee exchange rate, and that it uses all tools to manage the volatility in exchange rate. This fuelled fears that the central bank may not intervene to protect the rupee from falling sharply, said dealers.
In addition, a high current account deficit (CAD) has continued to weigh on the Indian currency. CAD touched a record high of 4.8 per cent of the GDP in the fiscal year 2012-13 due to high oil and gold imports.
“As of now, we expect it to defend Rs 60/USD, as a breach will surely push up expectations towards Rs 63/USD. Yet, we estimate that RBI will find it difficult to sell beyond $30 billion to defend the rupee,’’ said Indranil Sen Gupta, India Economist, DSP Merrill Lynch.
