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Rupee free fall to 57.70: experts say June rate cut under cloud,CAD ,CurrencyWatch ,Dollar ,Emerging markets ,India ,Rupee,GDP, business news, current global updates, PDF Print E-mail
Written by Administrator   
Monday, 10 June 2013 06:37
 Rupee free fall to 57.70: experts say June rate cut under cloud

RupeeCoins ReutersThe rupee today plunged to hit its life-time low of Rs 57.70 in early trade on heavy dollar demand and the US currency strengthening against major rivals overseas. The currency seemed to be heading towards 58.

Forex dealers said a firming dollar against euro and other currencies in the global market on the back of better-than-expected US jobs report and strong demand for the American currency from importers mainly weighed on the rupee.

The rupee had lost 22 paise to close below the key 57-mark at 57.06 on Friday against the US dollar for the first time in a year. According to CNBC-TV18, the Reserve Bank of India has neither denied nor confirmed its presence in the market.

Meanwhile, the BSE benchmark Sensex rose 0.71 percent to 19,566.22.

Experts are of the view that the rupee’s new life low is accentuating the weak economic sentiment for India. Many attribute the fall to the widening CAD.

Here is what experts have to say about the rupee fall:

The continued decline of the rupee against the dollar will impact India’s fundamentals,StanChart said on CNBC-TV18, attributing the decline more to sentiment rather than fundamentals. The present rupee depreciation is reminiscent of the August 2016′s decline. The Indian debt market is likely to witness more FII outflows.

Foreign investors have pulled out Rs 7,600 cr from the Indian debt market in just one week due the rupee’s weakness.

JP Morgan is of the view that India is vulnerable to currency risks due to high current account deficit. The RBI, which has time and again voiced concerns about the widening CAD, is unlikely to cut interest rates in the June Policy, the brokerage told CNBC-TV18.

India’s economic affairs secretary, however, said that the panic in the forex market is unwarranted. He also said that the government is watching the situation closely.

India’s chief economic advisor Raghuram Rajan said the government will continue to take medium-term measures to control the current account deficit.

RBI Governor D Subbarao on Friday had said that that there has to be a reason to defend the rupee. He also indicated that the central bank will intervene in the forex market only to contain volatility and not to support the rupee.

With inputs from PTI

Source:FirstPost

Last Updated on Monday, 10 June 2013 06:46