The Indian rupee continued its downslide on Thursday and lost 21 paise to end at a
fresh 10-month low of 56.38 against the US dollar, on fag-end spurt in demand for the American currency after the Reserve Bank of India (RBI) painted a dim macro economic picture.
RBI Governor D Subbarao fuelled
fears of the local currency plunging to record-low levels in the short-term, saying the CPI inflation is still high.
"There are certain factors like sectoral imbalances... We have the highest fiscal deficit as compared to our peer emerging economies... Our external sector problem is large current account deficit," he said.
At Interbank Foreign Exchange (Forex) market,
rupee commenced slightly better at 56.15 a dollar from previous close of 56.17 and improved further to 56.04. However, it turned negative tracking Subbarao's comments and declined to a low of 56.39.
It finally settled at 56.38, a fall of 21 paise or 0.37 per cent.
The rupee, which fell for the third straight day, ignored the
$140 million capital inflows in equities. Forex dealers said there was no sign of RBI intervention in forex market.
"The rupee was trading quietly but RBI Governor's comments on CAD, balance of payments and inflation unnerved the currency. It can touch 56.6 level soon," said Dhanlaxmi Bank Executive Vice-President Srinivasa Raghavan.
Ahead of expectations of steady US GDP and jobs data that may force the Federal Reserve to consider early withdrawal of stimulus, the US dollar strengthened against major rivals.
Considering the global trends, rupee is likely to revisit record lows of 57-level, analysts said. All eyes are now on India's fourth quarter GDP data that will be released on Friday.
"Rupee movement was mainly due to month end demand for dollars by oil importers along with volatility in the equity market. Also, international factors like strengthening of dollar influenced the movement," said N S Venkatesh, Head of Treasury of IDBI Bank.
In a three-day downmove, the rupee has plunged by 81 paise, or 1.45 per cent. In May alone, it has dropped by over 4.5 per cent so far.
With inputs from PTI
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