Rupee slumps to 58.16

Rupee slumps to 58.16
Highlights

Now all eyes on Reserve Bank, government Mumbai (PTI): The rupee on Monday sank by a staggering 110 paise...

Now all eyes on Reserve Bank, government saidMumbai (PTI): The rupee on Monday sank by a staggering 110 paise to life-time low of 58.16 against dollar, making the struggling economy further vulnerable as imports become costlier, inflation risks rise and record high CAD worsens. A confluence of negative factors including heavy dollar demand and slowdown in capital inflows put pressure on the rupee, which has slumped by 8 per cent from 53.80 on April 30. According to Forex traders, there were no visible signs of RBI intervention to arrest rupee slide, but expectations are high that the central bank will come with restriction on banks overnight net long positions to reduce the volatility and speculation like in the past. Finance Ministry tried to sooth frayed nerves with Economic Affairs Secretary Arvind Mayaram saying: "If you see weakening of all currency vis-a-vis dollar, rupee is also not unaffected in that sense. But I think this is panic (in) the market which is unwarranted." RBI Governor D Subbarao in a recent interview had said the central bank does not target any level or band for the rupee against the dollar. At the Interbank Foreign Exchange (Forex) market today, the rupee commenced lower at 57.18 and immediately touched a high of 57.17. The local currency further reeled under pressure to register a low of 58.16 and concluded at 58.15, a whopping fall of 109 paise or 1.91 per cent. Rupee's earlier intra-day record low was 57.32 on June 22, 2012. Previously, rupee had tumbled by 124 paise, or 2.57 per cent, on September 22, 2011 and by 119 paise, or 2.47 per cent, on November 12, 2008. Last Friday's better-than-expected US jobs data appears to have given the dollar a new lease of life as economic recovery of the world's largest economy means US Fed will probablt scale down its monetary stimulus programme soon. Experts are already forecasting the battered rupee to sink further to near 60-levels. "Unless, RBI takes some kind of steps to stabilize the currency, the rupee may touch 58.50-58.90 level against dollar," said Hemal Doshi, Chief Currency Strategist, Geojit Comtrade. The dollar index was up nearly 0.20 per cent against a basket of major rival currencies. Reacting to rupee life-time low, M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) said that this kind of volatility may be good in the short term but would "impact the long term interest" of exporters. The weakness in rupee has fuelled fears of capital outflows. "The US Treasury yields would look more attractive and that too could see a pullback in investor flows in the nation. High capital inflows support appreciation in the Rupee and vice-versa," said Reena Rohit, Chief Manager-Non Agri-Commodities & Currencies, Angel Broking. Meanwhile, rupee stumbled against pound sterling to 90.36 from last weekend's close of 88.90 and also slumped against the euro to 76.83 from 75.66. It, however, recovered smartly against the Japanese yen to 58.83 per 100 yen from 59.67.
ONGC, RIL to get higher revenues on falling rupee
New Delhi (PTI): State-owned Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd (RIL) will reap windfall profits from the rupee dipping to an all-time low as they will earn more on selling natural gas in US dollars. ONGC and RIL bill their consumers like fertilizer plants and power stations in US dollar. So every time the rupee dips against the Green Buck, their earnings go up. With rupee touching an all-time low of Rs 57.9 to a US dollar, the companies will see rise in their revenues, industry sources said. At current production of less than 15 million standard cubic meters per day, RIL would get about Rs 43 lakh per day more from rupee decline to Rs 57.9 from Rs 50 to a US dollar. For ONGC, it would mean over Rs 1.42 crore a day gain on about 50 mmscmd of gas output.
Panic unwarranted:Arvind
RupeeNew Delhi (PTI): Putting up a brave front in the wake of steep decline in rupee to all time low of 58.16, government said the panic is unwarranted and hoped the domestic currency will stabilise "in a while". "If you see weakening of all currencies vis-a-vis dollar, rupee is also not unaffected in that sense. But I think this is panic (in) the market which is unwarranted," Economic Affairs Secretary Arvind Mayaram said on sidelines of a workshop here. This, he said, started off with misinterpretation of what Federal Reserve Chairman Ben Bernanke had said regarding Quantitative Easing (QE) recently. "They have now more than clarified that this (quantitative easing withdrawal) is not imminent, neither it is going to be something which will happen quickly. I think this will settle down in a while. We should not worry but we are watching the situation closely," he said.
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