Dips 33p against the USD on Fed comments, RBI auction
The rupee extended losses for the second day, dropping 33 paise to 59.67 against the dollar, after the Federal Reserve Chairman Ben Bernanke’s comments strengthened the US currency and the RBI drained only a fifth of its bond-selling target in an auction to curb liquidity.
The rupee’s losses in the past two sessions have brought the domestic currency close to levels seen before the RBI had unveiled a slew of measures to tame exchange rate volatility.
The rupee on Thursday opened weak at 59.61 per dollar from 59.34 previously at the Interbank Foreign Exchange Market, then moved in a range of 59.49 and 59.79 before closing at 59.67, a fall of 33 paise, or 0.56 per cent.
The dollar index rose 0.16 per cent against its major rivals as US Federal Reserve Chairman Ben Bernanke yesterday reiterated that changes to the central bank’s bond-buying program would be data dependant. The USD 85-billion-a-month buying was instrumental in driving up liquidity in emerging markets and an early withdrawal is feared to hit flows.
Persistent dollar demand from importers, mainly oil refiners and some banks, in view of the firm dollar overseas, affected the rupee, a forex dealer said.
“The rupee depreciated against the US dollar today due to local as well as global factors. On the local front, the RBI auction results came as a negative factor for the rupee,” said Abhishek Goenka, founder & CEO, India Forex Advisors.
As per the RBI website, the central bank accepted bids for Rs 2,532 crore worth bonds compared with Rs 12,000 crore on offer. The sale was one of the steps taken by RBI to reduce exchange rate volatility.
The Reserve Bank of India, which announced measures on Monday evening to address exchange rate volatility by curbing liquidity, said on Wednesday it would conduct a special 3-day repo at an interest rate of 10.25 per cent for Rs 25,000 crore to allow banks to meet the requirements of mutual funds.
“The trading range for the spot USD/INR pair is expected to be within 59.20 to 60.00,” said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
Forward dollar premiums moved down on sustained receipts by exporters.
The benchmark six-month forward dollar premium payable in December ended down at 197 ½ to 202 ½ paise from Wednesday’s close of 200-210 paise. Far-forward contracts maturing in June declined to 399-404 paise from 403-413 paise.
The RBI fixed the reference rate for the dollar at 59.7120 and for the euro at 78.2195.
The rupee remained weak against the pound sterling, falling to 90.75 from the previous close of 90.35, and dropped against the euro to 78.18 from 78.00.
It was slightly lower against the Japanese yen at 59.61 per 100 yen from 59.54.