Rupee hits a lifetime low of 61.21 against dollar

The rupee hit a lifetime low of 61.21 against the dollar in early trade today and was trading slightly higher at 61.01 in afternoon trade.

The Indian unit, which closed at 60.225/235 on the interbank foreign exchange market on Friday, commenced trading at 61.19 against the dollar and was trading in a range of 61.19 and 60.80 before falling to 61.01.

Marketmen attributed the slight improvement in the morning trade to a reported intervention by the Reserve Bank of India (RBI).

The rupee was trading at 61.01 at 3:00 pm, down 78 paise (or 1.28 per cent) from the previous close of 60.225/235 a dollar.

Dealers said there was some dollar selling by public sector banks on RBI's behest.

However, persistent dollar demand triggered by the strength of the US currency in the overseas market weighed on the rupee.

The sentiment also affected the local equity market, causing a sharp fall in the index.

The rupee has been bearing the brunt of high oil prices and a consequent spike in India's current account deficit and a continuous outflow of short-term foreign capital.

The RBI had earlier proposed setting up a separate window for financing import requirements of oil companies, by far the biggest buyers of foreign currency.

Gold imports, another drag on the country's external trade balance, however, was low in June, hitting an 80 per cent decline from the previous month.

The rupee, the worst performer against its emerging economy peers, has lost over 10 per cent this year.

The Indian economy is sitting on a current account deficit of a record 4.8 per cent of its gross domestic product in the fiscal year that ended in March.

The rupee's fall also hit the market for bonds, which fell to a two-month low as foreign investors sold more than $7 billion in debt since 22 May.

The yield on 10-year yield rose as much as 13 basis points to 7.63 per cent from its previous close.