Rajan comments halt rupee slide for now
14 Nov 2013
The rupee halted its falling trend after a 5-day losing streak on Thursday, following comments by Reserve Bank governor Raghuran Rajan that the RBI was not in any hurry to close the dollar window for state-run oil companies.
The rupee was trading at 63.12 against the dollar, up 19 paise from its previous close, at 12.47 am local time.
The rupee resumed trading at the interbank foreign exchange market today at 63.15 a dollar against the previous day's closing level of 63.30 and firmed up further to 62.95 before quoting at 63.07 per dollar at 10.45am.
The rupee moved in the range of 62.95 and 63.19 levels.
On Wednesday, the rupee fell to a more than a two-month low of 63.88 against the dollar in its opening trade citing heavy dollar demand from oil companies and banks.
RBI governor, who called a sudden press conference on Wednesday to soothe concerns about the economy and the threat posed by the return of dollar demand by oil companies into markets.
While the RBI has now routed back majority of the dollar demand from oil companies to the market, Rajan said the central bank will not rush the process of withdrawing the dollar swap window and that there were various options for the oil companies to repay dollar to the central bank, which gave a boost to the sagging rupee.
Further, despite heavy FII outflows, the RBI chief said India can still break even on capital flows, which in turn boosted the rupee sentiment.
RBI opened the dollar window for state-run oil companies after the rupee sharply depreciated in July and August, weighed down by rising market demand for the US currency.
Rajan also said India was better equipped to face the tapering of the tapering of the US fiscal stimulus/
Dollar-rupee futures declined on Thursday. The rupee-dollar November contract was trading lower by 36 paise, or 0.57 per cent at 63.30 as of 12.36 pm, against previous close of 63.66.
The November contract touched a high of 63.42 and low of 63.09 after opening at 63.35.
A total of 0.60 million contracts were traded as of 12.39 p.m. Turnover for November contract was Rs3,799 crore while open interest was 0.47 million.