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Updated: December 13, 2011 23:35 IST

Rupee slips to historic low

Special Correspondent
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Dollar gains against other currencies overseas amid euro zone debt concerns put pressure on the Indian rupee. Photo: P.V.Sivakumar
Dollar gains against other currencies overseas amid euro zone debt concerns put pressure on the Indian rupee. Photo: P.V.Sivakumar

The rupee touched a record low against the dollar for the second day in a row on Tuesday as the dollar supply dried up. It ended at 53.23/24, down 0.7 per cent from Monday's close of 52.84/85, after touching a record low of 53.52 in the intra-day.

“The undertone looks very negative. This scenario may continue till February 2012,” said K. N. Dey, Director, Basix Forex.

Not just the negative external factors (especially the Euro Zone concerns), domestic issues, too, propelled the fall of the Indian currency. “Dollar liquidity has almost dried out,” said Mr. Dey. There is a huge redemption of foreign currency convertible bonds (FCCB) from November to March 2012. Further, the year-end repatriation of funds by the foreign institutional investors (FIIs) is very high in this period. Huge oil demand would also push up the demand for dollar.

The rupee has lost 4.8 per cent of its value against the dollar in the last four weeks and 16 per cent so far this year

Trade deficit in October was around $19.5 billion. In November, it recorded at around $ 14 billion. The index of industrial production (IIP) recorded a de-growth of 5.1 per cent in October 2011, compared to 11.3 per cent growth in October 2010, extending the slowdown in industrial growth witnessed in recent months.

PTI reports:

“The rupee's fall is driven by the strengthening of dollar across global markets and continuous weakening of the euro. The Indian currency is going to witness sustained pressure in the coming days,” Ramesh Krishnan, head of treasury operations, Dhanlaxmi Bank said. The only positive, which can uplift the rupee is if the Reserve Bank does not take any rate action in its mid-quarterly monetary policy review on December 16, he added

The rupee premium for the forward dollar recovered on fresh paying pressure from banks and corporates. The Reserve Bank fixed the reference rate for the dollar at Rs 53.4030 and for the euro at Rs 70.4435.

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