Mumbai: The rupee on Thursday slumped to a record low, battered by continuing concerns from global markets and primarily tracking the fall in the euro.
The Indian currency, however, closed much stronger on news that the Reserve Bank of India (RBI) has asked banks to directly sell dollars to the state-owned oil marketing companies, thus taking off the pressure.
The local currency closed at 56.06 a dollar, after strengthening as much as 55.76 in the intraday following a news report by Dow Jones Newswire of direct dollar selling to oil marketers.
The RBI also sold dollars in the market through public sector banks after the local currency hit 56.51 a dollar level in morning trade.
However, the depreciation bias on the rupee will continue, say dealers, as high risk aversion is expected to put pressure on the local currency in the coming days.
In May alone, the rupee has declined by around 6.51% because of the uncertainty in global markets and worsening fiscal discipline in the domestic economy.
Thursday’s fall was more because of the drop in the euro than domestic factors, according to Naveen Raghuvanshi, associate vice president of foreign currency trading at Development Credit Bank Ltd.
In the last two days, the euro has dropped by 0.92% and is currently trading at $1.24, down 0.18% from the previous close, according to Bloomberg data.
According to traders, there wasn’t much demand for the dollar in the domestic market.
“The demand was restricted today, possibly due to less activity on account of the national strike,” Raghuvanshi said.
Slower-than-expected growth in gross domestic product (GDP) also dampened sentiments. India’s GDP rose 5.3% in the March quarter, the slowest since 2008. Growth for the fiscal year stood at 6.5%.
The benchmark Sensex index on the Bombay Stock Exchange closed at 1,6218.53, down 0.57%. The Nifty gauge on the National Stock Exchange was at 4,924.25 points, down 0.54%.
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