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RBI Likely Sells Dollars Starting Rs 51.79

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[The rupee touched the 52 per dollar mark for the first time in 32-1/2 months on Monday as domestic equities weakened and oil importers bought dollars. At 3:13 p.m. (0943 GMT), the partially convertible rupee was at 52.00 per dollar, 1.3 per cent weaker than Friday's close of 51.3350/3450, after touching 52.02, its weakest level since March 5, 2009. The RBI likely sold dollars starting 51.79 rupees on Monday to arrest the sharp fall in the local currency, five traders said. At 11:12 a.m. (0542 GMT), the partially convertible rupee was at 51.60/61 per dollar, off its low of 51.7950 -- its weakest since March 12, 2009. "The quantum has not been too high today, but they (RBI) likely sold starting 51.79 and up to 51.69 levels," a senior dealer with a state-run bank said. The RBI has always maintained that it does not protect any particular level on the rupee and would only intervene to iron out excessive volatility. RBI intervened in the foreign exchange market in September, after following a hands-off approach for nine straight months, as the unit fell to its lowest level in more than two years, its monthly bulletin showed earlier this month. The central bank releases intervention data with a two-month lag. Ability To Intervene In FX Market Limited The ability of monetary authorities to intervene and stem the rupee's slide is limited, a senior finance ministry official said on Monday, after the currency skidded to its lowest in 32 months. "The rupee cannot slide beyond a point. Ability to intervene (in the forex market) is also limited," Economic Affairs Secretary R. Gopalan told reporters. The partially convertible rupee has slumped 15.3 per cent from its strongest point this year in late July due to a widening trade deficit, rising oil import bill and subdued foreign inflows. At 2 p.m. (0830 GMT), the rupee was trading at 51.8350/8400 per dollar, within sight of its record low of 52.20 hit in March 2009. (Reuters)