Rupee posts eighth weekly drop, RBI intervenes

The rupee strengthened for a second session on Friday, continuing its recovery from record lows hit this week, after the Reserve Bank of India (RBI) stepped in to defend the currency and exporters and custodian banks were heavy sellers of dollars.

The unit still posted its eighth consecutive weekly fall, having hit seven consecutive record lows since May 16. Its latest was on Thursday when it fell to as much as 56.40.

The intense risk aversion from the euro zone has severely pressured the currency, but falls have been magnified by concerns about India's fiscal and economic outlooks.A slight easing of that risk-off sentiment -- with the euro inching up from two-year lows against the dollar on Friday -- has also helped the rupee recover over the past two sessions.

"The central bank was heard to have been there to some extent in early trade, but most of the gains today were on the back of heavy selling by exporters," said NSS Mani, chief foreign exchange dealer with State Bank of Travancore.

The rupee closed at 55.37/38 per dollar after ending at 55.65/66 on Thursday.

The RBI is believed to be looking to hold the rupee above the psychologically key level of 56 to the dollar, and has been seen intervening in the rupee forward markets, alongside its defence of the spot rupee.

Some of the dollar selling from exporters during the session was believed to come from companies that had missed the central bank's deadline on Thursday to convert half of their foreign currency holdings into rupees.

The outlook for the rupee remains weak, however, given concerns about India's outlook.The rupee has fallen for eight weeks now, its longest losing streak since the 11 weeks of falls that ended in October 2008.

Analysts at Goldman Sachs and Bank of America-Merrill Lynch cut their growth forecasts for India, citing reasons such as weak investment outlook, domestic policy uncertainties and the government's expansionary policy.Signs of fiscal consolidation from the government could help the rupee recover, analysts said.

India appeared to make a welcome gesture when it allowed state oil companies to raise petrol prices, but that unraveled after the government came under severe political pressure, raising doubts about whether it would be able to tackle the far more important hikes in fuels such as diesel."Any hike in diesel prices would be further positive for the rupee and could take it towards 54.60 levels while the topside should be capped at 56.50," Mani added.

Traders said there was good receiving by exporters in forwards as well, with the six-month forward premium falling to 169.75 points from 173.75 points at the open.The one-month non-deliverable forward rate was quoted at 55.88 while the three month was at 56.62.

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 55.40 on a total volume of $7 billion.

via: TOI.IT

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

Re ends at all-time low of 53.84; may go sub-54 by weekend

The rupee on Wednesday closed at all-time low of 53.84 losing a hefty 72 paise against dollar due to sustained demand for the US currency which rose sharply against major rivals after poll results in Greece and France fuelled fresh eurozone worries. 

Forex dealers said signs of strong capital outflows also weighed against rupee sentiment. They further said that rupee is expected to breach the 54 level by weekend given the current global situation. 

RBI is believed to have intervened when the rupee fell to 53.80 level but could not stem the fall.

At the Interbank Foreign Exchange (Forex) market, the rupee opened lower at 53.54 per dollar and fell further to intra-day low of 53.85 per dollar. It closed at 53.84 per dollar, showing a loss of 72 paise. The previous lowest closing was at 53.71 on December 14, 2011. 

"The fall in rupee today is due to three factors. Firstly, dollar strengthened against other currencies, especially euro, and secondly, a weak stock market contributed towards the rupee fall," J Moses Harding, Head of Global Markets Group of IndusInd Bank. Euro fell to over three-month low against dollar on fears that Greece could leave the eurozone. 

With Greece's Sunday general election results throwing up no clear winner, US dollar gained today amid Alexis Tsipras, leader of the Radical Left Coalition claiming that the verdict renders the Greek bailout deal null. 

On rupee fall, Indian Overseas Bank GM (Treasury) T S Srinivasan said, "Rupee has seen weakness today in sync with euro weakening against dollar. Today's fall is more due to international factors than domestic. Also, subdued capital flows to equity market had contributed to the fall." 

Rupee may breach 54-level in the near term given the persistent weakness in the currency, he added. On RBI's intervention, Harding said given the liquidity condition, there is not much scope for RBI to intervene.

Via : timesofindia.indiatimes