MUMBAI: The
rupee
closed at a new low against the
dollar
on Monday with the domestic currency coming under pressure as
foreign investors
sold
equities
. The rupee ended the day at 83.84, down four paise from Friday’s close of 83.8.
Dealers said that if the global rout in equities continues the
exchange rate
might move to 84 mark ahead of the
RBI
‘s monetary policy committee meeting on Thursday.
Dealers said that there were some late evening transactions that took place above 84 levels.
According to analysts, besides the sales by foreign investors, other developments were positive for the exchange rate. For instance, the dollar index fell from $104 to $102.20, and crude prices, which constitute much of India’s import bill, crashed from $78 to $72.
“The main factors contributing to the rupee’s fall are the selloff in capital markets and fund outflows, which have also affected other global currencies. The rupee is expected to face volatility, with a trading range between 83.75-84.20,” said Jateen Trivedi of LKP Securities.
While RBI has been intervening in the foreign exchange market, it has not been aggressively defending any particular level and has been allowing the dollar to inch up. “In just one week, the rupee has gone from being the best performing Asian currency year to date against the dollar to being in the middle of the pack,” said an IFA note.
