New Delhi: The Indian rupee plunged against the US dollar on Friday to cross the 57-mark, after risk assets were hit by heightened concerns about the world economy. Broad gains in the dollar versus major currencies on the back of global risk aversion and weakness in domestic shares weighed on the rupee. Dollar buying from oil firms and gold importers added to the downward pressure, traders said.
At 12:44, the rupee was at 57.28 to the dollar, down by 1.74 per cent from Thursday's close, after hitting a new all-time low of 57.33/$. It had opened at 56.80 to the dollar, weaker than Thursday’s close.
Also Read: Rupee fall - 10 industries that will be most affected
The Indian currency had ended at a record closing low 56.30 against the US dollar on Thursday after hitting the then all-time low of 56.55 to the dollar on increased capital outflows from equity markets and rising demand from importers amid the US Fed indicating weak growth prospects for the US economy.
No significant intervention was seen from the Reserve Bank. Forex traders said that they were on watch for any potential intervention from the RBI to defend the rupee, as the renewed global risk aversion amid deep uncertainty about India's fiscal and economic outlook.
Also Read: RBI governor D Subbarao on why rupee is falling
However, sources said that RBI has written to oil marketing firms to buy 50 per cent of their dollar needs from SBI in a bid to control the currency's free fall against dollar. "We continue to talk to RBI for more relief on dollar demand side for oil companies," said India's Oil Secretary Girish Chandra Chaturvedi.
This is equivalent to a special dollar window for oil companies, and should have a positive impact on Rupee once demand for dollar reduces. On a monthly basis, oil companies demand for $8 bn, of which $4 bn gets taken out of the market, if RBI's measures are implemented.
"The rate of the dollar will be as per the market and RBI will make sure that banks don’t quote a higher price," Chaturvedi added. (Read More)
Meanwhile, sources from SBI told NDTV that the state-lender is awaiting further clarity on modalities of dollar purchase by oil companies from RBI. So far, the companies have not yet come to the bank for direct purchase quote, they added.
Also Read: Why rupee is falling despite declining oil prices
Asian shares fell on Friday and the safe-haven dollar hovered near its highest in a week-and-a-half after weak manufacturing data from the United States, Europe and China heightened fears over the outlook for global growth. The Dow fell over 250 points too on Thursday.
A long-expected downgrade to the credit ratings of 15 of the world's biggest banks by ratings agency Moody's added to the gloom, which also weighed on commodities and currencies such as the Australian dollar that are linked to resource demand.
Federal Reserve’s move to extend its current bond-buying programme by less than expected levels had earlier fuelled a weakness in global markets on Thursday along with weak factory data from China and a contraction in the euro zone's private sector contributed to the falls.
The rupee has been plagued by concerns about Indian economy too as credit rating agencies Fitch and S&P warned about a paralysis in policy making affecting the country.
The rupee will remain vulnerable to any flare-ups of global risk aversion, while also subject to domestic challenges, experts said. It has now fallen over 25 per cent in the last one year and nearly 6 per cent in 2012.
With inputs from Thomson Reuters
At 12:44, the rupee was at 57.28 to the dollar, down by 1.74 per cent from Thursday's close, after hitting a new all-time low of 57.33/$. It had opened at 56.80 to the dollar, weaker than Thursday’s close.
Also Read: Rupee fall - 10 industries that will be most affected
The Indian currency had ended at a record closing low 56.30 against the US dollar on Thursday after hitting the then all-time low of 56.55 to the dollar on increased capital outflows from equity markets and rising demand from importers amid the US Fed indicating weak growth prospects for the US economy.
No significant intervention was seen from the Reserve Bank. Forex traders said that they were on watch for any potential intervention from the RBI to defend the rupee, as the renewed global risk aversion amid deep uncertainty about India's fiscal and economic outlook.
Also Read: RBI governor D Subbarao on why rupee is falling
However, sources said that RBI has written to oil marketing firms to buy 50 per cent of their dollar needs from SBI in a bid to control the currency's free fall against dollar. "We continue to talk to RBI for more relief on dollar demand side for oil companies," said India's Oil Secretary Girish Chandra Chaturvedi.
This is equivalent to a special dollar window for oil companies, and should have a positive impact on Rupee once demand for dollar reduces. On a monthly basis, oil companies demand for $8 bn, of which $4 bn gets taken out of the market, if RBI's measures are implemented.
"The rate of the dollar will be as per the market and RBI will make sure that banks don’t quote a higher price," Chaturvedi added. (Read More)
Meanwhile, sources from SBI told NDTV that the state-lender is awaiting further clarity on modalities of dollar purchase by oil companies from RBI. So far, the companies have not yet come to the bank for direct purchase quote, they added.
Also Read: Why rupee is falling despite declining oil prices
Asian shares fell on Friday and the safe-haven dollar hovered near its highest in a week-and-a-half after weak manufacturing data from the United States, Europe and China heightened fears over the outlook for global growth. The Dow fell over 250 points too on Thursday.
A long-expected downgrade to the credit ratings of 15 of the world's biggest banks by ratings agency Moody's added to the gloom, which also weighed on commodities and currencies such as the Australian dollar that are linked to resource demand.
Federal Reserve’s move to extend its current bond-buying programme by less than expected levels had earlier fuelled a weakness in global markets on Thursday along with weak factory data from China and a contraction in the euro zone's private sector contributed to the falls.
The rupee has been plagued by concerns about Indian economy too as credit rating agencies Fitch and S&P warned about a paralysis in policy making affecting the country.
The rupee will remain vulnerable to any flare-ups of global risk aversion, while also subject to domestic challenges, experts said. It has now fallen over 25 per cent in the last one year and nearly 6 per cent in 2012.
With inputs from Thomson Reuters
