The volatile Rupee hits the lowest, trading at over 61 against the Dollar. It has surpassed its lowest record of 60.76 that it achived on June 26, 2013. There are chances that Rupee may fall further and might get weaker against Dollar in coming days, further creating a havoc in the Indian market.
Arvind Narayanan, executive director and head (sales, treasury & markets) at DBS India said, “RBI could look at curbing discretionary non-trade payments overseas, or money retained outside may be ordered back into the country. RBI may also look at opening a special window from where oil companies could buy dollars, so that it does not disrupt the over-the-counter forex market.”
The Indian rupee has been going through a see-saw phase since the last few months. It has witnessed a downfall of 20-25% over the last two years. The downfall in rupee is affecting many major sectors such as Oil, Gold, Steel among others.
Weak rupee means costly imports. Crude Petroleum is the foremost imported commodity in the Indian market. Continuous rise in rupee against the dollar has augmented Petrol price hike for 3 times in the last month. However, Outsourcing industry is anticipating higher profits as they earn largely in foreign currency.
RBI’s intervention in the whole scenario has not been very appreciating. RBI’s governor D. Subbarao has said that a faulty defense system against rupee is the prior reason of its slip.He further added that the Central Bank will interfere only to maintain the volatility in Rupee. On account of the sharp slide in the rupee, the Reserve Bank of India is now selling dollars through its state-run banks. The fall in Rupee has created a fear of more foreign outflow than expected.