According to forex dealers, the dollar's strength against a basket of some currencies overseas weighed on the rupee.
Amid sustained foreign fund outflows, the rupee fell by 12 paise to 68.84 against the US dollar in early trade on Tuesday. According to forex dealers, the dollar’s strength against a basket of some currencies overseas weighed on the rupee, reported PTI. However, the fall was arrested by a higher opening of the domestic equity markets. Yesterday, the rupee closed with gains of 15 paise at 68.72 against the greenback.
Provisional data from the stock exchanges showed that foreign portfolio investors (FPIs) sold shares worth a net of Rs 569.91 crore on Monday, while the domestic institutional investors purchased stocks worth Rs 740.39 crore. “Today USDINR is likely to remain in the range of 68.60 (stretched 68.48) to 68.89 (stretched 69.06),” Portia Advisory Services LLP said in a note.
“On the commodity front, crude has risen on concerns of supply shortage as the Norway Oil workers are set to strike later. And so shortage from Libya, Canada, Iran (with proposed sanctions effective November 18) and now Norway is more than the OPEC led Saudi Arabia’s additional pumping. Brent crude is currently at $78.42 per barrel. Rupee will continue to follow trends in crude, dollar, flows,” the note added.
Rupee at 70?
A recent PTI report quoted bank officials saying that the rupee will continue to remain under pressure and could further dive to the 70-mark against the US dollar this week if it breaches the crucial level of 69.30. However, currency experts differ in their opinion and believe that it is not very likely that the rupee will breach 70 anytime this week.
“I think eventually it will happen. But the at the moment it looks like we will see some respite,” Anant Narayan, Head – Financial Markets, Standard Chartered Bank told CNBC TV18 in an interview. “There has been very strong defense of the rupee by the RBI. I reckon they have sold more than $25 billion since April. Also, there is an interest rate defense of the rupee underway.”
“Having said that, we do have a problem in terms of CAD expanding. We are struggling to make our primary deficit come down. So, over a period of time, I think 70 will be seen. In this year, however, the government will be very keen not to see headlines on the rupee. Therefore, the defense of the rupee both from the RBI and on interest rates might continue,” Narayan added.