Rupee dropped to its lowest level in five months on Monday as a sell-off in the stock markets heightened fears of capital outflows, while January trade data showed the deficit more than tripling from a year ago.
The partially convertible Rupee ended at 40.39/40, its lowest finish since September 18 2007, and down 1 per cent from Friday's close of 40.01/02. It was the biggest single-day percentage fall in four months.
"The outlook is bullish for the dollar in the near-term as importers are covering their positions and the party seems to be over for the stock markets," said R A Sankara Narayanan, head of currency trading at state-run Bank of India.
The local stock index fell more than 5 per cent, its biggest percentage fall in six weeks, triggering a wave of short-covering on dollar positions by foreign and private banks. The Rupee has fallen more than 2 per cent so far in 2008. The Rupee is unlikely to appreciate as sharply this year as last year, when its gains were "extraordinary", finance minister told media.
"Dollar/Rupee may go up all the way to 41 in the short term," said Narayanan. Trade data on Monday showed Country's trade deficit widened in January to $9.36 billion more than three times bigger than in the same month in 2007.
"The trade data has only added to the Rupee's woes," said a local dealer at a private bank. While it’s a bad news to the Indian Economy, but it’s a good news to corporate companies and NRIs.
Keywords: Rupees, Dollar, Foreign Exchange of Indian, Rupee Conversion to Dollar.
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