Mumbai: The rupee shed 22 paise to 63.45 per dollar in the opening trade on Wednesday against the previous close of 63.23 on the back of high demand for dollar from oil importers.
However, the domestic unit slightly recovered and was trading at 63.33 at 10.06 a.m. local time.
On Tuesday, the currency had breached the 64-level mark against the dollar and also surpassed Rs 100-mark against the British pound to a fresh low of Rs 100.35 making pound the most expensive currency for the rupee.
According to dealers, lack of inflows and pull out of foreign institutional investors from emerging markets are weighing on the currency.
Moreover, a strong American currency and concerns over funding the current account deficit (CAD) amid heavy outflows by foreign investors from emerging markets continue to weigh on the rupee sentiment.
In addition, JP Morgan has downgraded India to ‘neutral’ from ‘overweight’ citing strain in balance of payments. This could further weaken the country’s sentiment for foreign investors.
Export prospects
Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO), said this is a temporary phase and that the rupee will strengthen looking at the bright export prospects in the coming months.
“Improvement in overall economic parameters in the US and modest growth in Europe in the last quarter (after four consecutive contractions) would help India’s exports which may clock 20 per cent growth from October onwards,” he said.
Exporters should use the rupee depreciation to augment exports by cutting down their prices to outprice their competitors, Ahmed added.
Currencies of emerging economies such as South Africa, Brazil and Indonesia among others have also been under pressure due to outflows after the US central bank indicated that it would start withdrawing its monetary easing policy as the US economy starts recovering.
G-secs, call rates
The benchmark 7.16 per cent government security, which matures in 2023, opened sharply higher at Rs 92 from yesterday’s close of Rs 86.78. The yields on the security softened sharply to 8.37 per cent from 8.90 per cent.
The call money rate, rate at which banks borrow from each other for short-term funding, a tad higher at 10.35 per cent from the previous close of 10.30 per cent.
Source:- thehindubusinessline.com
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