The rupee on Monday plunged to a record intra-day low of 61.21 against the dollar after a US jobs report showing companies hired more workers than economists forecast added to the case for the US Federal Reserve to reduce monetary stimulus.
The Reserve Bank of India (RBI) stepped in and sold the dollar through state-run banks and pulled back the currency which finally closed 0.62 per cent, or 39 paise lower at 60.61.
The RBI probably sold dollars to slow the rupee’s decline, traders said. As indicated by the RBI Governor himself last week, any dollar sales by the central bank would be aimed at reducing market volatility, rather than supporting the exchange rate, as the rupee’s slide is in line with losses in other currencies.
The previous all-time low of 60.76 was recorded on June 26.
“The recent RBI statement rate added to the woes of the rupee and crushed all hopes for intervention,” said Abhishek Goenka, CEO, India Forex Advisors.
On Monday, among other Asian currencies, the Taiwan dollar fell 0.39 per cent, South Korean won by 0.86 per cent, Philippines peso by 0.78 per cent, Malaysian ringgit by 0.69 per cent and Thailand baht by 0.48 per cent. The rupee has depreciated over 13.50 per cet in the past two months.
“The market reaction to Fed plans is getting too loud. even if the Fed starts tapering asset purchases, the quantum of QE3 will still remain much more than QE 1 and QE 2. The end of QE is near but not so immediate,” said a dealer.