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Rediff.com  » Business » Poll: New low in store for Rupee this month

Poll: New low in store for Rupee this month

Last updated on: June 11, 2013 12:03 IST

Poll: New low in store for Rupee this month

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Neelasri Barman

After hitting an all-time low on Monday, the rupee is expected to weaken further through June and end the month at Rs 58.50 against the dollar, according to the median of forecasts of 10 currency experts surveyed by Business Standard.

“In our view, it (the rupee) will continue to trade weak till the Reserve Bank of India (RBI) is able to recoup the $60 billion of forex (including forwards) sold since 2008. Keeping rates high will only defer recovery, deter foreign institutional investor (FII) equity inflows and delay re-accumulation of forex reserves,” said Indranil Sengupta of Bank of America-Merrill Lynch.

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Image: Foreign currency traders work inside a trading firm behind the signs of various world currencies, in Mumbai.
Photographs: Vivek Prakash/Reuters

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Poll: New low in store for Rupee this month

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The rupee touched an all-time low of Rs 58.14 a dollar on Monday as the dollar gained globally, after a reasonably healthy pace of US jobs data renewed expectations that the Federal Reserve might curb its bond-buying programme later this year.

On Monday, the rupee had opened at Rs 57.26 against the dollar. In intra-day trading, it touched a high of Rs 57.16 before closing at Rs 58.14. The rupee had ended at Rs 57.07 a dollar on Friday. In late June last year, the local currency had touched a low of Rs 57.32.

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Image: Women stand next to a shop selling garlands made of Indian currency notes.
Photographs: Mukesh Gupta/Reuters

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Poll: New low in store for Rupee this month

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“While microeconomic concerns are bending towards current account deficit, gold imports and a general slow economic scenario, the macroeconomic factors that are affecting the rupee are the strength in the Dollar Index, which is being backed by expectations that the Fed would withdraw its bond-buying programme,” said Reena Rohit, chief manager, non-agri commodities and currencies, Angel Broking.

According to Rohit, this, in turn, would lead to weakness in the rupee. Also, US treasury yields would look more attractive and that, too, could see a pullback in investor flows in the nation, she added.

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Image: A shopkeeper counts Indian currency notes inside his shop in Jammu.
Photographs: Mukesh Gupta/Reuters

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Poll: New low in store for Rupee this month

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According to data from the Securities and Exchange Board of India, FIIs pulled out $117.83 million on Monday from domestic markets.

“The government and RBI have done enough to attract supplies from offshore markets and the only solution may be for RBI to build enough firepower to defend the rupee. What it would need is enough dollar resources in its kitty and surplus system liquidity,” said J Moses Harding, head-asset/liability committee and economic and market research, IndusInd Bank.


Image: A Kashmiri shopkeeper sits near garlands made of Indian currency notes at a market in Srinagar.
Photographs: Fayaz Kabli/Reuters

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