Rupee swung wildly by 18% in 2012;may remain volatile in 2013

Dec 30 2012, 16:39 IST
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It was a year of wild moves for rupee in 2012, when it hit a life-time low of nearly 58 against the US dollar and fluctuated by over 18 per cent, with experts foreseeing continued volatility in 2013. (Reuters) It was a year of wild moves for rupee in 2012, when it hit a life-time low of nearly 58 against the US dollar and fluctuated by over 18 per cent, with experts foreseeing continued volatility in 2013. (Reuters)
SummaryIt was a year of wild moves for rupee in 2012, when it hit a life-time low of nearly 58 against the US dollar and fluctuated by over 18 per cent, with experts foreseeing continued volatility in 2013.

It was a year of wild moves for rupee in 2012, when it hit a life-time low of nearly 58 against the US dollar and fluctuated by over 18 per cent, with experts foreseeing continued volatility in 2013.

Even as the government and Reserve Bank stepped up efforts to boost the Indian currency, rupee has emerged as one of the worst performers among major global currencies in 2012.

"The domestic currency moved in a wide range of 49 to near 58 levels, with maximum volatility in the 52-56 zone, mainly as a function of the sustained demand for the dollar and the euro-zone crisis," Dhanlaxmi Bank Executive Vice- President (Treasury) Srinivasa Raghavan said.

The rupee started the year on an uptrend and gained by over seven per cent against the US dollar in the first month of 2012 -- appreciating from 53.31 on the first day of January to 49.47 at the end of the month.

The next month saw the rupee rising to as high as 49.02 on February 29 but being unable to sustain the below-50 level for long as it plunged to a low of 57.32 by June-end.

After bouts of gains and losses that saw it moving by over 18 per cent between highest and lowest levels of the year, the rupee currently stands at 54.77 against the US dollar -- down 2.73 per cent from where it started in 2012.

On the rupee outlook in 2013, market experts are of the view that the Indian currency may continue to remain highly volatile, although it might see some appreciation in the second half of 2013.

"Next year, we are likely to witness the rupee moving in a broad range of 50-57. It will move in the 53-57 zone for a very brief period in January-March. First half of the year is expected to be more volatile than the second half," Dhanlaxmi Bank's Raghavan said.

"Globally, it will depend on two things -- solutions to the euro-zone crisis and US cliff, which are expected by the end of the first six months. On the domestic front, it will depend on measures taken by the government for narrowing the trade gap," he added.

Domestic factors like possible rate cuts by RBI may bring some relief to the markets only in the second quarter of the calender year in April-June, he said.

HDFC Bank's chief dealer Ashtosh Raina said that rupee might be seen strengthening to as much as

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