SENSEX NIFTY
May 14, 2012, 07.10 PM IST | Source: CNBC-TV18

For rupee 54.30 important support level

It was the day where the rupee saw a lot of shorting due to heavy demand for the dollar which came in from the FIIs especially after bad inflation numbers, markets started tanking, reports Latha Venkatesh, Banking Editor of CNBC-TV18.

Latha Venkatesh

Executive Editor, CNBC-TV18

It was the day where the rupee saw a lot of shorting due to heavy demand for the dollar which came in from the FIIs especially after bad inflation numbers, markets started tanking, reports Latha Venkatesh, Banking Editor of CNBC-TV18.

FIIs were selling equities across Asia and Asian currencies in other countries as well. Oil companies started buying dollars which compounded the flow especially, when there was no supply of dollars coming in from the exporters which added additional impact on the rupee.

Generally, when the rupee touches 54 mark exporters come in and sell their dollar at this highest level but that did not happen much today. It is expected that the exporters may in next week sell much of the dollar as per the new RBI’s directive to exporters to offload half the amount of dollars they hold in their Exchange Earners' Foreign Currency Account (EEFC) accounts. The only supply of dollars came in from RBI, which was a little sporadic and the Reserve Bank did not want to spend too much fire power because it reckoned it as fighting a global trend.

Now, all eyes are on how all the risk assets are doing overnight, basically the Brazilian riyal, various commodities, other Asian currencies and equities when they open for trading tomorrow.

The Reserve Bank, importers and exporters will take a call depending upon how these risk assets will move. 54.30 will be an important support level for the rupee, that’s the previous intra day low on 15 December and then people will start looking for 55 as a potential psychological support level for the rupee.

READ MORE ON  Rupee, dollar, weakness,

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