Rupee Declines to Rs 65.94 Vs US Dollar Tuesday Aug 27,2013

The rupee declined to an all-time intra-day low of 65.94 per dollar on Tuesday Aug 27,2013 on heavy month-end demand of the US currency from importers and banks amid sharp fall in the local equity market. 

It quoted 65.94 at 1300 hrs (IST) at the Interbank Foreign Exchange (Forex) Market and at close was Rs 66.24 per US Dollar

The rupee resumed lower at 65.00 per dollar as against Aug 26,2013 Monday closing level of 64.30 per dollar at the Forex Market and dropped further to a historic low of 65.94 per dollar.

Note

The Rupee was more or less stable for much of the first half of 2013 and has depreciated by 16 % or more vis-à-vis the dollar over the last two months (see Chart)

The volume of trading in exchange-traded currency derivatives increased from Rs. 2.6 billion in September 2008, when such trading was first permitted, to Rs. 234.4 billion in June 2013, the RBI hints at a link between this and exchange rate volatility

The RBI which has been pointing fingers at the currency derivatives market as a speculative hub where the dollar rules higher, now argues that prices in those markets, or those driven by speculation, are beginning to influence spot dollar prices in terms of the rupee

The Reserve Bank recently banned proprietary trading by banks in the currency futures/exchange-traded currency options markets. Such trading is allowed only on behalf of clients

 SEBI also tightened exposure norms for currency derivatives to check excessive speculation by increasing margin requirements and curtailing open positions on currency derivatives

Rupee Vs US Dollar Thursday Aug 22,2013

The Rupee on Thursday Aug 22,2013 tumbled further and hit an all-time low of 65.12 against the US currency in the late morning trade on persistent dollar demand from banks and importers

The rupee resumed lower at 64.85 per dollar as against the Wednesday’s closing level of 64.11 per dollar at the Interbank Foreign Exchange Market and dropped further to an all-time low of 65.12 per dollar