India Forex Advisors on Thursday said that the Rupee may remain weak for some time and may hit 69-69.50/$ level. Forex dealers said besides a strong month-end demand for the American currency from importers, continued capital outflows by foreign funds and the dollar’s bull run on an imminent hike in Fed’s interest rates, mainly weighed on the domestic currency. The fall in the rupee comes at a time when investors are souring on the government’s shock move to remove high-value notes from circulation, which came on the eve of the unexpected election of Donald Trump as US President.
The rupee hit a record low of 68.36 by plunging 30 paise against the US dollar on Thursday amid sustained foreign fund outflows and the greenback’s surge in overseas markets. Reuters reported that the Reserve Bank of India was spotted intervening in the foreign exchange market. RBI sold around $500 million to support the rupee, traders said. Two interventions by the central bank in the morning sparked a sharp rebound in the currency from near record lows hit earlier in the day. The Indian currency shrunk 2.92 per cent since Donald Trump’s victory in the US Presidential polls earlier this month. Sources from the Finance Ministry told ET Now that various factors can be attributed but certainty around US rate hike and currency curb impact are the main reasons for Rupee’s fall. Investors also remained cautious weighing the impact of government’s demonetisation move. Surging US bond yields have also contributed to the rupee’s fall.