In­dian ru­pee closes at 54.33 against dol­lar

The Pak Banker - - 6BUSINESS -

In­dia’s ru­pee re­acted down­wards from nearly 3-week in­tra-day high of 53.90 and closed 32 paise down at 54.33 against the Green­back dur­ing the week un­der re­view fol­low­ing dis­tinctly weak lo­cal eq­ui­ties amid fresh dol­lar de­mand from im­porters and some banks.

Dovish state­ment by the RBI over the fu­ture cut in the key in­ter­est rates fol­low­ing higher in­fla­tion and po­lit­i­cal mess af­ter the DMK with­drew the sup­port of the Congress-led UPA government at the Cen­tre over the is­sue of al­leged hu­man rights vi­o­la­tions of Tamils in Sri Lanka also dis­ap­pointed the mar­ket, a forex dealer said. Con­tin­ued cap­i­tal in­flows and weak USD overseas af­ter the mid- week failed to stem the fall in the ru­pee, he added.

At the In­ter­bank For­eign Ex­change (Forex) mar­ket, the domestic unit re­sumed the week lower at 54.28 a dol­lar from pre­ced­ing week­end’s close of 54.01, but re­cov­ered later on Tues­day in early morn­ing to a high of 53.90 on hopes of key rates cut by the RBI, level not seen since Fe­bru­ary 28, 2013 when it had logged an in­tra-day high of 53.60.

How­ever, de­spite the short-term lend­ing and bor­row­ing (repo and re­verse repo) rates cut by 0.25 per­cent by the apex bank, the ru­pee fell back on dovish state­ment by the RBI that there is lim­ited scope for the rate cut in im­me­di­ate near fu­ture due to ris­ing in­fla­tion and higher cur­rent ac­count deficit (CAD).

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