The Indian rupee closed at a fresh 6-month low Rs 65.45, versus yesterday’s closing of Rs 65.12, as forex market participants feared fund outflows from the domestic capital markets. US Federal Reserve’s intention to hike rates in December and unwinding of its stimulus measures also added in the weakening of sentiments. The Indian rupee is reeling under pressure because of the increased buying in the safe-haven assets such as gold and yen and the continuous strengthening of the US dollar against a basket of currencies. In an interview to ET Now, Jamal Mecklai, CEO, Mecklai Financial Services said, after Rupee hit a fresh intraday low of Rs 65.38 against US dollar, “ Several things happened together. One is the fact that the Fed said that are going to start unwinding their years of QE. Now, interestingly, the US markets were not affected by it. However, our markets were affected, and rupee and a lot of currencies were affected.”
This plummeting in the rupee value comes after it had been trading in the 64-65 range in the last few month, and even hit a high of Rs 63.6 in early August. “For a long time, people were thinking: Oh my God! How much longer can the rupee stay so strong. I think it sort of reached a cracking point end of last week,” said Jamal Mecklai in the same interview.
Heavy demand for the American currency from importers and banks, has also played a role in rupee’s weakening. Yesterday, the rupee had plunged 31 paise to close at a 6-month low of 65.1 after heavy buying of the US currency and concerns on the macroeconomic front. This was the weakest closing for the home currency since March 24, when it had ended at 65.41 against the US dollar.