With dollar emerging as a safe haven for global investors getting restive on fresh Eurozone worries, rupee further lost 57 paise on Wednesday closing at a new low of 56.24 despite RBI efforts to prop it up.
While the Indian foreign exchange market was following the global cues, the situation for rupee aggravated amid sustained month-end dollar demand from importers.
In the last two days, rupee has lost 106 paise. Its earlier record low was on May 23 when it closed at 56.
After opening weak, the rupee soon breached the key 56-mark as the American currency strengthened with reports saying the Bank of Spain expects the nation’s economy to sink deeper into a recession.
With the euro falling to the lowest level since July 2010 and continued dollar buying by importers to meet their month-end bills, the rupee finally closed at 56.24.
Experts said if RBI hadn’t intervened today, the rupee could have approached its record low of 56.38 hit on May 24.
“As dollar strengthened against other currencies today, it had its reflection on the rupee. However, if it was not for the central bank’s intervention today, the rupee would have fallen further,” said Moses Harding, Head— ALCO and Economic & Market Research, IndusInd Bank.
According to Abhishek Goenka, CEO, India Forex Advisors, the rupee will remain under pressure on the Eurozone issue.
On Tuesday,, Egan—Jones Ratings cut Spain’s credit level, the third downgrade from the agency in less than a month.
“The third downgrade (for Spain) from the rating agencies in less than a month has made investors cautious about any hopes that the issue will be resolved soon in Spain,” he said.
The rupee has lost over 6 per cent this month, the worst performance in Asia, driven by a combination of deteriorating global sentiment and weak domestic fundamentals.
Meanwhile, the Indian benchmark Sensex today dipped by 126.43 points or 0.77 per cent.