Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

Rupee Falls To Two-Year Low, Sniffs 67 Per Dollar

Adding to the pressure on the rupee is sustained selling of local shares by foreign portfolio investors this month

Photo Credit :

1448606387_e1dwf3_rupee2-ap-680.jpg

The Indian rupee declined to its lowest level in two years on rising month-end demand for the dollar and strengthening of the greenback in global markets.

The rupee fell about 25 paise to push the rupee to a level of around 66.80 per dollar. Importers typically increase their demand for foreign currencies close to the month end to make payments for goods purchased from overseas.

Adding to the pressure is the rise in dollar value in global markets on expectation the US Federal Reserve will increase its rate for the first time in a decade. This move has also strengthened the dollar index. The dollar index is measure of the US dollar value relative to a basket of currencies of its trade partners. The dollar index rises when the dollar strengthens against other currencies.

Another factor that could impact the rupee in coming days is any depreciation by the Chinese Central Bank of its yuan. A weakening yuan would trigger a similar move by the competing Indian rupee. In the more immediate future, any spurt of the dollar value could push the rupee closer to 67 level.

Adding to the pressure on the rupee is also sustained selling of local shares by the foreign portfolio investors this month. FPIs have sold a net Rs 9,486 crores of shares and bonds in November compared with a net purchase of Rs 22,350 crores in October.

Purchase of shares by overseas investors has slipped over the past few years. FPIs purchased shares worth net Rs21,349 crores in 2015 so far. This compares with Rs97,055 crores in 2014 and Rs113,135 crores in 2013.

India’s exports have been declining through this year, shrinking for the 11th straight month. Yet, since imports too have been muted, the impact of merchandise is unlikely to have an immediate major impact in moving the currency.


Tags assigned to this article:
rupee dollar exports currencies