- Rupee closes 17 paise lower dollar after hitting life-time low of 71.96
- Rupee falls for sixth session in a row against greenback
- Analysts see rupee continuing weakness till oil prices come down
The rupee declined 17 paise against the US dollar to close at 71.75 on Wednesday. That marked the sixth consecutive session with the rupee settling lower against the greenback. While crude oil prices rose further in anticipation of tightening supply, buying of the dollar by banks and importers along with strengthening of the US currency overseas dragged the rupee lower, say analysts. The rupee hit-a lifetime low of 71.96 against the US dollar, before settling at 71.75 for the day. Suspected central bank intervention contained the magnitude of the rupee's fall.
The Reserve Bank of India (RBI) likely intervened mildly in the forex markets on Wednesday, news agency Reuters reported citing two traders. The RBI is expected to have sold dollars at 71.80 per dollar in the local spot forex market to stem a sharp fall in the rupee, according to the agency.
Seeking to allay concerns of the public on rupee depreciation, the government said there is no need to panic.
"RBI is certainly doing whatever is necessary. I don't think there is any need for the world's fastest-growing economy to come out with panic and knee-jerk reactions," Finance Minister Arun Jaitley said on Wednesday.
Exporters rushed to cover short-term orders and "possible intervention by RBI through PSU Bank might have helped Rupee to curb losses to recover back up to 71.65 before ending the session at 71.75 levels", said forex advisory firm IFA Global.
The dollar strengthened against a group of six major of currencies, amid weakness in emerging market peers and concerns over global trade disputes, while the US economy continued to exhibit strength.
A moderate stance on the rupee fuelled expectations of more rate hikes by the central bank going forward.
"With the Reserve Bank of India (RBI) being less aggressively to curb the rupee fall, there is an expectation of interest rate hikes or issuance of NRI bond to raise dollar money," IFA Global added.
A pick-up in GDP growth to a two-year high of 8.2 per cent in April-June had last month triggered expectations of status quo on key lending rates this year.
Meanwhile, trade secretary JS Deepak said rupee depreciation led to a more than 11 per cent increase in exports so far this year. The country's fundamentals are strong and the capital flows healthy, he said. Merchandise exports rose 14.32 per cent in July to $25.77 billion from a year ago.
At the current level, the rupee has declined more than 12 per cent against the greenback so far this year.
(With agency inputs)