Rupee falls for 6th week; growth concerns weigh

The rupee fell on Friday, posting its longest weekly losing streak since the 2008 global financial crisis, after data showing a contraction in factory output for March added to worries about India's economic outlook. 

The rupee remains within sight of a record low of 54.30 against the dollar hit in December, having fallen for six consecutive weeks, its longest losing streak since a string of 11 weekly losses in late 2008. 

Worries about India's fiscal challenges and its growth outlook are combining with concerns about foreign outflows, resulting in a toxic mix. The Reserve Bank of India (RBI) has tried to stem the falls with frequent interventions -- though no definitive signs of dollar selling emerged on Friday -- and measures such as Thursday's order for exporters to convert half of their forex holdings into rupees. 

However, traders do not think the RBI will be successful for long. Markets only felt a muted impact after a deputy governor at the central bank said it will continue to target volatility in currencies and appeared to open the door for potential rate cuts. 

"Foreigners are looking at the trade deficit rather than the possibility of rate cuts. We see no major appreciation for the rupee," said Paresh Nayar, head of fixed income and forex trading at First Rand Bank in Mumbai. 

The rupee ended at 53.63/64 to the dollar, after it had closed at 53.44/45 on Thursday. It fell 0.3 percent for the week. 

Nayar expects the rupee to trade in 52.50-54 range to the dollar in the near term, given the prospect of more RBI action. 

Factory data contracted 3.5 percent in March from a year earlier, government data showed on Friday. The data is notoriously volatile, but is an important print for economic activity. 

Also weighing on the rupee on Friday was the continued fall in stocks, which notched their fourth consecutive daily loss. 

The one-month offshore non-deliverable forward contracts were at 53.94. 

In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all ended around 53.80 on a total volume of $4.32 billion.

Via: timesofindia.indiatimes

Rupee's slide: RBI steps in, exporters asked to cut forex kitty

In a decisive step to check sliding rupee, the Reserve Bank today disallowed exporters from retaining half of their foreign exchange earnings, leading to a sharp recovery of Indian currency against dollar. 

Today's move, which came after the rupee hit a record closing low of 53.82/83 to dollar yesterday, led to a 94 paise rise in the value of domestic currency in the early trade. 

However, the local currency lost some of the gains after the Forex market realised that RBI's decision would result in only up to $3 billion extra dollar supply in the market in initial stages. 

In the intra-day trade, rupee had dipped below the 52- level, but pared some of the gains to close at Rs 53.42 against dollar. Besides, the central bank has also fixed limit for intra-day trading of foreign currency by banks. 

"On a review of the scheme, it has been decided that 50% of the balances in the Exchange Earners' Foreign Currency Account (EEFC) accounts should be converted forthwith into rupee balances and credited to the rupee accounts as per the directions of the account holder," RBI said.

As per the existing rules, an exporter is allowed to retain 100% of their earning into foreign currency. EEFC is an account maintained in foreign currency with a bank. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account. 

Concerned over sliding Rupee, the central bank has been taking steps in the past few days to increase the dollar supply in the market. These included-- increase of interest rates on NRI deposits and tightened norms for utilisation of the fixed deposit funds in a bid to check outflow of forex.

Via: timesofindia.indiatimes