Rupee crashes to life’s low of 64.55 a dollar, 101 a pound
23 Aug 2013
The rupee crashed to a new low of 64.55 a dollar today breaking past yesterday's low of 64.11 a dollar amidst heavy dollar buying by large state-run banks and dollar demand from custodian banks.
The rupee, which extended its downslide for a fifth consecutive day today, is widely speculated to fall below 70-a-dollar levels in the near term as foreign investors and importers continue to whip up demand for dollar.
The Indian currency also lost further ground against other major currencies and breached the 101 level against the British pound in intra-day trading on the inter-bank foreign exchange market today.
The rupee fell as low as 101.2 a pound in afternoon trading on the forex market.
Traders said the RBI did not intervene in the spot market during the session and was instead looking to cool the inter-bank call money market with a Rs8,000-crore bond buying plan.
The RBI steps to increase availability of cash in the banking system had only negligible impact on spot market for the Indian rupee.
The yield on the benchmark 10-year bonds were sharply lower at 8.34 per cent today, down 56 basis points from Tuesday. Yields were seen falling as much as 69 basis points to 8.21 per cent in intra-day trading.
The bond buying, which comes after a series of liquidity-tightening measures by the RBI, failed to support the rupee against the dollar and other hard currencies.
However, these measures gave boost to banking stocks and the Bank Nifty surged around 6 per cent in early trade. The gains, however, did not last.
The falling rupee also pulled down the stock market and the BSE Sensex crashed over 660 points from the day's high on Wednesday.
The 50-share Nifty ended just above the 5,300 mark, after falling 99 points.
Gold prices, however, fell further by 0.27 per cent to Rs30,650 per 10 gm in the futures market today as speculators trimmed positions in line with weak overseas demand.
At the Multi Commodity Exchange, the December contract fell by Rs82, or 0.27 per cent, to Rs30,650 per 10 gm. While the October contract was down Rs72 or 0.23 per cent at Rs30,740 per 10 gm.
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