Mumbai : Amid re-ignited concerns over the macro-economic scenario in India and abroad, the rupee has again slipped below the 55-level against dollar, the largest fall among its major peers globally in the past 30 days.
As against the US dollar, the rupee has sharply fallen from 52.88 levels one month ago to 55.16 on Friday, marking a drop of over 4.2%. This is the largest fall vis-a-vis the US dollar in the past one month among 25 major currencies across Asia, Americas, Europe, Middle East and Africa.
Recent economic data like exports, imports, balance of payments and deficit has been bad. There also have been intermittent withdrawals by the FIIs in the stock market.
“The recent worries over US economy have also not helped the rupee’s cause. A combination of these factors has dragged down our currency,” Dhanlaxmi Bank Executive Vice-President (Treasury) Srinivasa Raghavan said. Analysts also feel there has been an increase in speculative activity in the NDF (Non-Deliverable Forward) forex segment.
RBI must enter forex market
In another development, leading brokerage Bank of America- Merrill Lynch (BofA-ML) has said that the Reserve Bank needs to intervene in the forex market to recoup the rupee and thus arrest the imported inflation, considered the main reason for spiralling prices.
Indranil Sen Gupta, Chief Economist, BofA-ML said, “We do not expect the forex market to get bullish on the rupee until the RBI has recouped forex reserves…the RBI will need to buy $90 billion if it is to replenish the import cover to even nine months.
The report also said that to stabilise the rupee ‘the best solution surely will be for RBI to accumulate forex and buy the rupee’. –PTI