Rupee recovers from record low but outlook gloomy
December 13th, 2011 - 7:16 pm ICT by IANSMumbai, Dec 13 (IANS) The Indian rupee, which Tuesday slipped to a new low of 53.50 to a US dollar intra-day, recovered a bit, but weakness in the currency persisted as demand for the green-back from importers and banks rose amid global uncertainty.
A depreciating rupee will make oil imports costlier, again increasing pressure on oil retailers to hike prices of at least de-regulated fuel like petrol, adding to upward inflationary pressures.
The rupee started on a weak note at about Rs.53.10 to a dollar at the Interbank Foreign Exchange compared to its previous close of Rs.52.84/85 per dollar. It fell to the record low of 53.50 a dollar in intra-day trade but recovered somewhat later on.
Around 5.20 p.m. the Indian currency was at 53.18 to a dollar. A minor rally Tuesday at Indian stock markets also helped steady the currency.
Data on industrial output that reported a decline to minus-5.1 percent in October, worse than what industry and experts had earlier feared, had triggered rupee’s decline in the currency market Monday.
Bearish sentiments took a strong grip on domestic equity markets which led to foreign investors selling their interests, again leading to increased demand for the dollar. If overseas funds intensify their selling in the coming days, the rupee could again slip further.
The Indian currency has lost 16 percent in the past four months itself.
Eyes are now on the Reserve Bank of India (RBI), whether it will intervene again in arresting the rupee’s decline - like it did in September and October. The central bank had sold $845 million and $943 million in September and October respectively to support the currency, according to data available with the RBI.
It did not buy any dollars in both months.
Analysts also blame the pressure on the rupee on the country’s widening current account deficit, which has tripled to $14.1 billion in the April-June quarter of current fiscal, when compared to the previous quarter.
The difference between a country’s imports of goods, services and its exports is called current account deficit.
For the whole of 2011-12, current account deficit is expected to be around $54 billion.
- Rupee dips below 55 against a dollar - May 21, 2012
- Rupee recovers from record low; Sensex up - May 17, 2012
- Rupee slide continues: hits new low of 54.60 against dollar (Lead) - May 17, 2012
- Rupee hits a new low of 55.47 against dollar - May 22, 2012
- RBI intervenes as rupee slides to new low (Roundup) - Dec 15, 2011
- Rupee sinks to 56.18 against dollar (Lead) - May 23, 2012
- Rupee slide continues, now at another all-time low - Dec 14, 2011
- Rupee dips to new intra-day low of 54.91 to a dollar - May 18, 2012
- Rupee hits new low for third straight session (Roundup) - Dec 14, 2011
- Rupee falls on IIP figures, impact of RBI action muted - May 11, 2012
- RBI to defend rupee from falling further (Lead) - May 18, 2012
- Eurozone crisis keeping Indian markets unstable: Pranab - Nov 23, 2011
- Rupee hits record low of 54.50 against dollar (Lead) - May 16, 2012
- Rupee dips to record low of 54.42 against dollar - May 16, 2012
- RBI may not hike rates as growth slows - Dec 15, 2011
Tags: 1 billion, bank of india, bearish sentiments, currency data, currency market, current account deficit, domestic equity, foreign exchange, foreign investors, four months, importers, indian currency, indian rupee, indian stock markets, inflationary pressures, oil imports, petrol, rbi, reserve bank of india, roundup