Indian rupee pares some losses, closes 64 paise down to 67.92 against dollar as Brexit happens

By: | Updated: June 24, 2016 5:44 PM

Indian rupee vs US dollar: Indian rupee remained under pressure throughout the day on Friday as Brexit became a reality after 'Leave' campaign won over Remain' in the EU referendum.

Indian rupee vs US dollarIndian rupee vs US dollar: Indian rupee remained under pressure throughout the day on Friday as Brexit became a reality after ‘Leave’ campaign won over Remain’ in the EU referendum. (Photo: Reuters)

Indian rupee remained under pressure throughout the day on Friday as Brexit became a reality after ‘Leave’ campaign won over Remain’ in the EU referendum. The Indian currency closed 64 paise down at 67.92 against the US dollar.

The rupee slumped intraday 96 paise against the US dollar to trade below the 68-level on Friday. At 11.03 am, Indian rupee was trading down 88 paise against the dollar to 68.15.

On Thursday, Indian rupee ended higher by 23 paise to close at 67.25 against the US currency. In the overseas market, the dollar slumped against the Pound Sterling in the late trade when polling was underway in a referendum on whether the UK should stay in the European Union.

Expressing a shock over UK referendum result, RBI Governor Raghuram Rajan said, “RBI watching all markets, including currencies, and will provide liquidity wherever necessary.’ On rupee fall he said that Indian currency’s fall is lesser than many other currencies and the central bank is prepared for any eventuality and will intervene in currency markets when necessary.

Experts have indicated a knee-jerk reaction for the Indian currency. “Brexit is major global political and economic event and the effect shall be felt on the world economy and financial markets over a period of time. Over the short run we expect volatility to stay very high, as central banks intervention to stabilise asset prices and market’s attempt to reduce leverage and risk create a perfect storm in financial markets. Emerging market currencies like Rupee, is exposed to this kind of volatility. We remain of the view that a broad range of 67.00-69.00 can be seen over the medium term,” Anindya Banerjee, currency analyst, Kotak Securities said.

Samir Lodha, MD, Quantart Market solutions told Feonline in an interview,” Indian rupee could see a knee-jerk reaction against the US dollar if Brexit happens and Indian currency move towards the range of 67.90 to 68.50 to a dollar.” Read full interview here

 

While assuring the financial markets, Economic Affairs Secretary Shaktikanta Das said rupee depreciation is in line with other Asian currencies and govt, RBI have discussed all possible eventualities to deal with the situation. According to sources, looking at Brexit RBI has intervened in forex market with liquidity support.

On the global front, Japan had intervened to stem the yen’s strength with the Japanese currency jumping above 100 to the dollar due its safe haven status, with UK referendum counting indicating Britain is likely to leave. China’s yuan fell to its weakest level against dollar over five years.

The British pound slumped over 9 per cent against the dollar as turmoil came to the world markets.

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