Rupee hits a record low of 60.63 against dollar

26 Jun 2013

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The rupee slumped to a record low today, hitting an all-time low of 60.63 against the US dollar in the afternoon trading on the interbank foreign exchange market. 

With no big support from the Reserve Bank of India (RBI) or exporters, the Indian currency was solely under the mercy of foreign institutional investors (FIIs) who triggered huge outflows from the equity and debt markets. End-of-the-month demand from importers also helped the rupee's fall.

The slump came after the RBI made a feeble attempt to defend the rupee before it hit the 60 level against the dollar.

The rupee opened the day lower at 59.72 per dollar, against the previous close of 59.67 a dollar. The Indian currency continued to fall amidst persistent dollar demand and hit a low of 60.63 against the US currency in the afternoon session of trading before recovering some lost ground. The rupee was hovering around 60.56 to a dollar towards the close of trading.

FIIs have been persistently paring their investments in the equity and debt markets, hammering the Indian currency in the process. Inflow of foreign capital through buyback offer of Hindustan Unilever (HUL) also did not offer much help to the falling rupee.

On top of this, an announcement by the US Federal Reserve chairman Ben Bernanke that the Fed might ease its monthly bond-buying programme by March 2014 triggered heavy capital outflows from most emerging markets, thereby further strengthening the dollar.

Bond yields hardened to 7.75 per cent from 7.68 per cent with the 8.15 per cent government security taht matures in 2022 trading lower at Rs102.52, up from Tuesday's close of Rs103. The benchmark 7.16 per cent bonds maturing in 2023 fell sharply to Rs97.15 from Rs97.66 with the yields ising to 7.57 per cent from the previous close of 7.51 per cent.

On the domestic interbank money market, overnight call rates were trading at 7.3 per cent against their previous close of 6.80 per cent.

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