Foreign investors offload stocks, pull down rupee
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MUMBAI: The Indian rupee plunged to a 20-month low on Thursday, following heavy selling by foreign portfolio investors, which further dragged down the equity markets for the fourth consecutive day.
The rupee closed the day at 64.23 per dollar as against its previous days close of 63.54, losing 69 paise or 1.08 per cent. Forex dealers said that the rupee had enjoyed strong support at 63.90 per dollar. However, persistent selling by overseas investors in Indian equity and debt market triggered demand for dollars due to whi-ch the rupee breached its psychological 63.90 level mark.
According to them, the rupee is now expected to weaken further to 64.50-64.90 level against the US dollar with some predicting even a slide beyond 65 level mark.“There were a lot of short positions in the dollar–rupee pair, which got covered once the rupee breac-hed the 63.80-63.90 level mark against the US dollar. This created further weakness in the rupee. The 63.90 level was a crucial resistance level for the rupee and when it fell below those levels, there was also panic buying of dollars by importers,” said Hemal Doshi, chief currency strategist, Geofin Comtrade Ltd.
If the rupee remains above the 64.20 levels against the dollar in the coming days, Mr Doshi explained that the rupee could go beyond the 65 level mark. Another factor, whi-ch is putting more pre-ssure on the rupee, is the rise in global crude oil prices due to which there is increased hed-ging activities by oil importers leading to more demand for dollars.
In the US, the non-farm pay roll data will be released on Friday. “If the data is better than expected, there is a greater possibility of US Federal Reserve going ahead with its interest rate hike,” said Abhishek Goe-nka, founder and CEO, India Forex Advisors.
( Source : dc correspondent )
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