Weekly review: RBI stops Indian rupee from strengthening against US dollar!!
In a dull trade during the week under review, the Indian rupee softened further by six paise to close at 59.17 against the US dollar following sustained demand for the American currency from importers amidst possible intervention by the RBI through state-run banks.
However, record-breaking local equities and increased capital inflows restricted the rupee's fall to a major extent, a forex dealer said.
Weekly review: RBI stops Indian rupee from strengthening against US dollar - Financial Express Mobile
Meanwhile, the RBI announced cut in statutory liquidity ratio (SLR) by 50 basis points that will result into a release of nearly Rs 40,000 crore into markets. The RBI kept the repo rates unchanged.
At the Interbank Foreign Exchange market, the domestic unit commenced the week lower at 59.27 and continued its downslide to a low of 59.48 on dollar demand from importers, mainly oil refiners.
It later bounced back to a high of 59.06 on bullish local stocks amid continued capital inflows before settling the week at 59.17, still showing a fall of six paise or 0.10 pct. Last week, it was down by 59 paise or 1.01 pct.
The benchmark S&P BSE Sensex closed the week sharply higher by 1,179.12 points to touch new peak - its biggest weekly gains in nearly last five years.
PramitBrahmbhatt, Veracity Group CEO, said, "Last week as expected the rupee traded range-bound. RBI credit policy came as a breather for the investors, as RBI Governor Raghuram Rajan kept the key interest rates untouched and also gave a positive statement saying that "if the economy stays stable, further policy tightening will not be necessary. On the other hand, if inflation comes down faster than currently anticipated, it will create an opportunity for an easing of the policy stance."
"Taking cues from this, the rupee ended near previous week's close. The major resistance for USD/INR pair is at 59.80 and on downside the support is at 58.50. Recommended to be cautious and Sell USD/INR (Futures) on rise with
appropriate stop loss as overall the rupee is expected to appreciate. Pivot point for the pair is at 59.21 and below is the support and resistance levels," he added.
Forward dollar premiums finished mixed. The benchmark six-month forward dollar premium payable in November closed a tad lower at 243.5-245.5 paise from 244-246 paise last weekend while far-forward contracts maturing in May 2015 shot up to 494-496 paise from 476.5-478.5 paise.
The RBI fixed the reference rate for the USD at 59.1970 and euro at 80.8345 from 59.0335 and 80.3350 previously, respectively.
The rupee remained weak against the pound sterling to end at 99.54 from last weekend's level of 98.91 and also moved down further against the euro to 80.73 from 80.44.
It, however, recovered against the Japanese currency to end at 57.81 per 100 Japanese yen from preceding weekend's close of 58.13.
