Rupee plunges to record-low close of 61.10 despite RBI steps; Sensex falls 153 points

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Mumbai: The rupee fell a massive 67 paise to all-time closing low of 61.10 against the dollar despite slew of steps taken by the government and the central bank in the past few weeks to support the battered currency.
There was heavy dollar demand from importers, mainly oil refiners, and some banks on behalf of their clients as hopes of a strengthening dollar overseas weighed on sentiment, a forex dealer said.
Better than expected US GDP growth has boosted the US dollar. At the Interbank Foreign Exchange Market, the rupee resumed lower at 60.61 a dollar from the previous close of 60.43 and touched a high of 60.58.
As local stocks declined, the rupee continued its downward march and touched a low of 61.17 before closing at an all-time low of 61.10, a fall of 67 paise or 1.11 per cent. The previous record low closing was 60.72 on June 26.
However, the rupee touched all-time intra-day low of 61.21 on July 8. "The moves by the government to curb rupee volatility and tame the exchange rate have partly worked," said Ashtosh Raina, head of forex trading at HDFC Bank.
"As long as there is no matching demand for the rupee, the dollar will always weigh heavy. That is what we have seen. The current account deficit (CAD) is still a major issue." In another attempt to support the rupee, the Reserve Bank yesterday made it mandatory for foreign institutional investors to obtain the consent of holders of participatory notes and derivative instruments before hedging.
Earlier, the central bank tightened liquidity for banks and took steps to curb speculative activity in forex markets, among others. The S&P BSE Sensex today fell for the eighth day, dropping 153 points, or 0.79 per cent, reversing early gains that came on the back of liberalised FDI norms.
FIIs bought shares worth a net USD 46.28 million yesterday. The dollex index, consisting of six global rivals, was up 0.09 per cent. "Today also, RBI intervention was suspected in the forex markets to support rupee," said Pramit Brahmbhatt, CEO of Alpari Financial Services. "Trading range for spot USD/INR pair is expected to be within 60.80-61.50."
"The rupee's weakness was mainly attributed to the upbeat data from the US, which sent the US dollar index to its one-week high," said Abhishek Goenka, Founder and CEO of India Forex Advisors.
"Although the central bank took some measures to stem the fall in rupee, it could not provide a long lasting relief to the currency." RBI Governor D Subbarao today reiterated that liquidity tightening measures will be rolled back only after stability is restored in the forex market as volatility hurts growth.
"While steps initiated by the government, SEBI and RBI have been able to help rupee not breach 62-levels, one must bear in mind all these steps will need be given some more time to see their full effect," said Dhanlaxmi Bank Executive Vice-President (Treasury) Srinivasa Raghavan.
Forward dollar premiums recovered on fresh payments by banks and corporates. The benchmark six-month forward dollar premium payable in January rose to 259-264 paise from the previous close of 251-255 paise.
Far-forward contracts maturing in July firmed up to 470-475 paise from 458-460 paise. The RBI fixed the reference rate for the dollar at 60.8035 and for the euro at 80.3655. The rupee remained weak against the pound sterling to end at 92.57 from the previous close of 92.07 and fell back to 80.70 against the euro from 79.99. It edged up against the Japanese yen to 61.22 per 100 yen from 61.25.
Next: Sensex falls 153 points, ignoring FDI norms as rupee weakens

Sensex falls 153 points, ignoring FDI norms as rupee weakens
Mumbai: The benchmark S&P BSE Sensex today surrendered initial gains from liberalised FDI norms and declined 153 points, the eighth day of losses, as the rupee weakened past the 61 level again.
The 30-share Sensex opened at 19,399.55 points and climbed to a high of 19,451.70 on buying in some blue chip counters from consumer durables, IT and refinery sectors following the government's decision yesterday to relax foreign direct investment (FDI) rules in several sectors.
Dragged down by a weak rupee and FII selling, the index then declined to 19,078.72 before closing at 19,164.02, a loss of 153.17 points, or 0.79 per cent. This is the second weekly drop for the Sensex, which has fallen 1,138.11 points, or 5.61 per cent, in the past eight sessions.
The 50-share Nifty index on the NSE dropped 49.95 points, or 0.87 per cent, to 5,677.90. The SX40 index on the MCX-SX closed 0.94 per cent lower. "The fall in the markets during the week has come about despite good gains in global markets, indicating the pre-dominance of domestic concerns," said Dipen Shah, head of Private Client Group Research at Kotak Securities. "The consistent weakness in the rupee, despite RBI's and government's efforts, has impacted sentiment."
The rupee once again dropped to below the 61 mark against the dollar on demand from banks and importers. The local currency touched an all-time low of 61.21 on July 8. To curb forex speculation, the RBI and market regulator SEBI had taken several steps, including restrictions on the futures market by way of raising margins and limiting positions that market participants can take.
RBI Governor D Subbarao today reiterated that liquidity tightening measures will be rolled back only after stability is restored in the forex market as volatility hurts growth.
Realty, power, metal, PSU, capital goods, FMCG and banking sectors declined on heavy selling pressure. Financial Technologies Ltd. was the biggest loser on the BSE for the second day, declining 21.12 per cent to Rs 151.25 after most trades were halted at unit National Spot Exchange Ltd.
Asian stocks ended higher as global manufacturing reports beat forecasts and central banks in Europe vowed to maintain stimulus. Key indices in Hong Kong, China, Indonesia, Japan, Singapore, Taiwan and South Korea rose.
European stocks moved in a narrow range in early trade as investors awaited the nonfarm-payroll report from the US. Benchmark indices in France and Germany inched up, while UK's FTSE eased 0.15 per cent.
In the domestic market, 24 Sensex shares fell, including Jindal Steel (7.29 pc), Coal India (5.84 pc), Tata Power (3.93 pc), Sterlite Ind (3.92 pc), Tata Steel (3.74 pc), HUL (2.95 pc), ICICI Bank (2.85 pc), Sun Pharma (2.06 pc), Dr Reddy's Lab (1.97 pc), M&M (1.92 pc), L&T (1.67 pc), ITC (1.6 pc), HDFC (1.13 pc), Bajaj Auto (1.26 pc) and ONGC (1.12 pc).
Among sectoral indices, the S&P BSE-Realty fell 4.01 per cent, followed by S&P BSE-Power (3.77 pc), S&P BSE-Metal (3.65 pc) and S&P BSE-PSU (2.64 pc). The S&P BSE-CD rose 5.38 per cent and S&P BSE-IT gained 0.96 per cent. The market breadth remained negative, with 1,491 stocks lower and 775 higher.
Total turnover dropped to Rs 1,855.70 crore from Rs 2,244.66 crore yesterday. Foreign institutional investors were net buyers of Rs 177.78 crore yesterday, according to provisional data with the stock exchanges.