Mumbai: The Indian rupee continued to slide on Thursday, registering a low of 56.38 against the dollar on strong demand for the US currency by oil companies before pulling back slightly at noon. Traders predict further depreciation in the local currency going ahead.
“I do not think the end (of the fall ) is near for the rupee. Given the current indications, it can very well test 56.50-57 levels soon. Today the market is slightly undecided with equity markets bouncing back and the euro settling down at 1.25 levels. Still, the inherent dollar demand continues,” said Naveen Raghuvanshi, associate vice president of foreign currency trading at Development Credit Bank Ltd.
At 12.30 pm, the rupee was trading at 56.1250 against the dollar, after having opened at 56.20. The Reserve Bank of India (RBI) was not seen selling dollars to support the home currency so far in the day, according to traders. Indian’s bellwether equity index, the Sensex, was trading at 16,153, up 1.27% on the Bombay Stock Exchange.
Globally, the US dollar remained strong against a basket of major currencies with the euro remaining under pressure as European Union leaders’ pledge to unitedly fight against the debt crisis failing to impress investors.
On Wednesday, C. Rangarajan, Prime Minister Manmohan Singh’s chief economic advisor, said that the direct sale of dollars by RBI to state-run oil companies should not be ruled out.
Rangarajan also told TV channel CNBC-TV18 that any special overseas bond sale backed by the government should not be aimed at meeting short-term capital flow needs and should be done only after perception about the rupee improves.
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