Mumbai, Sept 4:
The rupee further slipped 193 paise to 67.95 against the dollar on
persistent capital outflows and heavy dollar demand from banks and oil
importers at 4.26 p.m. local time.
The domestic unit opened 28 paise weaker to 66.30 per dollar against the
previous close of 66.02 due to renewed dollar demand from importers and
appreciation of the American dollar overseas.
Meanwhile, the 30-share BSE index Sensex ended down 651.47 points (3.45 per cent) at 18,234.66.
According to forex dealers, besides dollar’s gains against the yen and
euro on improved economic data, increased demand from importers for the
American currency also put pressure on the rupee.
Brinda Jagirdar, Economist, said: "While the sharp fall in rupee and its
aftermath has caused a lot of mayhem on the markets, particularly
pressure on corporates and banks, its impact on exports could be
positive. However, the recent PMI data coming in at below 50 (at 48.5)
has highlighted the contraction in the manufacturing sector. Thus, at a
time when external demand appears to be rising on the back of economic
recovery - Germany's PMI is the highest since July 2011 - India's PMI is
at a four-year low, so the economy is unable to ramp up its
manufactured exports and benefit from a weak rupee.''
The rupee sentiment was hit on lower GDP growth data announced last week.
India’s GDP (gross domestic product) growth decelerated to 4.4 per cent —
the slowest pace of expansion since the 2008 meltdown — in the first
quarter (April-June) of the current fiscal.
Special dollar window
Further, the Reserve Bank of India had announced a special dollar window
for oil retailers, which helped ease the offshore non-deliverable
forward (NDF) contracts.
“The RBI measures limited the volumes in the currency market by more
than half. Hence, the volatility reduced to some extent. Also, the RBI
did not intervened for the first time in many days,” said a dealer with a
nationalised bank.
The rupee saw sharp movements last week. It had hit a historic low of
68.80 against the US dollar on August 28. It had dropped 3.7 per cent
during last week alone.
Rupee depreciation
The Ministry of Finance had said that the rupee depreciation is not
reflective of any weakness in the economy. Also the rupee is heavily
under-valued at the moment and it is being addressed.
Though a strong dollar and dollar demand from importers limited the
rupee gains, investors are hoping for positive measures after the new
RBI Governor assumes charge on September 5.
Call rates, G-Secs
The inter-bank call money rate, the rate at which banks borrow money
from each other to meet their short-term fund requirements, was trading
lower at 10.15 per cent from its previous close of 10.25 per cent.
The 7.16 per cent government security, which matures in 2023, was
trading a tad higher at Rs 91.79 from the previous close of Rs 91.47
.Yields softened to 8.41 per cent from 8.47 per cent.