Rupee crashes below 56 level to new low against US dollar

PTI

Mumbai, 23 May 2012: Continuing free-fall for the sixth day in a row, rupee today crashed below the psychological level of 56 against US dollar to yet another all time low on heavy demand for the American currency from importers, especially oil refiners, amid foreign fund outflows and weak equities.

 

At the Interbank Foreign Exchange (Forex) market, the domestic unit recorded its steepest fall ever by dipping below the crucial levels of Rs 55 and Rs 56 per dollar within a span of two days, forex dealers said.

 

After a lower start at 55.82, the rupee continued its downward journey by losing 74 paise at 56.13 at 1350 hrs.

 

The dollar has also gained against the Euro and other leading currencies following ratings agency Fitch’s downgrading Japan’s sovereign rating by one notch to A+ with a negative outlook.

 

Strong dollar demand from importers pulled rupee down to a record low of 56.13, placing the domestic currency, which has lost over 12 per cent since March this year.

 

Forex dealers said the American currency remained in demand even as the Reserve Bank imposed restrictions of forward contracts by banks and arbitrage trading.

 

They said capital outflow of foreign funds from falling markets remained a major driver behind the rupee’s fall as dollar surges because investors are finding the American currency a safer bet amid concerns that Greece might exit euro-zone.
Data from market regulator Sebi showed that FIIs sold stocks worth Rs 283 crore yesterday.

 

Meanwhile, the BSE benchmark Sensex dropped below the 16,000 level by losing over 179 points.

 

Finance Minister Pranab Mukherjee had said yesterday: "The government is taking a series of steps. However, managing rupee is market-related...There is a lot of volatility.

 

"As and when RBI will consider necessary they will intervene. It depends on the market forces and market forces are uncertain," he said.