Currency Markets: Rupee Hits 28-month low

by khalid on 24/09/2011 · 1 comment

The rupee went through the sharpest fall in the recent times to touch 28 month low. Now, to buy a dollar you need to spend Rs 49.56. The rise was mainly carried on strengthening of dollar in the global market and also demands from FIIs (foreign institutional investors).

The dollar has touched this level after May 2009. At the time of closing Indian rupee closed at 49.56 to a dollar which is 2.5 percent higher from its previous close.

The main reason of such a jump in dollar was investors moving from emerging market equities & currencies and shifting it to dollars. FII’s were selling stocks and on the other hands foreign banks were buying dollars. The oil importers also joined the race to cover their near requirement of the currency.

The fall of rupee was in line with the fall of other emerging market currencies. Brazallian currency real fell by 5 percent whereas Korean’s won fell by 2.6 percent overnight and Indonesian currency rupiah fell by 2 percent.

Bankers were expecting role of RBI intervening to control the rates. As India’s current A/C is deficit, a weak currency will helps in the growth of the exports where as a weak rupee makes the import expensive and it further adds to inflation.

If this fall sustains than we expects that the RBI may come raising the interest rate for NRI deposits or may increase limit of foreign buying in the government bonds.

Bell the bull says: Rupee is at its weakest level since May 14, 2009

Related Posts Plugin for WordPress, Blogger...

Leave a Comment

{ 1 trackback }

Previous post:

Next post: