12.6.13

Rupee snapshot







The rupee neared levels of 59 against the dollar before intervention by the Reserve Bank of India through public sector banks pulled the domestic currency back to close at 58.40 – another record low and down 25 paise from its previous close.
RBI also ordered all exporters in Special Economic Zones to repatriate full value of exports within a period of 12 months from date of export. Earlier, there was no time limit for repatriating proceeds of exports from SEZs. Dealers said that although RBI appears to have sold dollars through some public sector banks, there was no major intervention.
According to bankers, RBI has not come out with sledgehammer measures to stamp out volatility because dollar has been gaining against currencies globally.
According to dealers, one of the reasons why the rupee has been hit harder than other emerging markets has been the sell-off in the bond markets. The sell-off in the bond markets has raised fears that RBI may hike rates in its mid-quarter review on June 17. Fears of currency-related losses for corporates and an interest rate hike led to the sensex falling 1.53% on Tuesday.
While the sharp fall in the value of the rupee has taken traders by surprise, there is no panic in the market. Some bankers feel that there is some irrationality in funds moving back to US treasuries as it is unlikely that the US Federal Reserve would withdraw the fiscal stimulus immediately.





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