Rupee hits new lifetime low of 59.68

Month-end dollar demand from oil importers and hefty FII outflows dragged down the rupee on Monday by 41 p to close at new lifetime low of 59.68, amid speculation that the RBI stepped in to check the currency slide as it nearly approached the 60-mark.

Also read: RBI can sell up to USD 30 bn in intervention: BofA

At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 59.55 a dollar as against last weekend’s close of 59.27. It continued its downslide to a low of 59.83, before recovering some ground to settle at 59.68 — still showing a fall of 41 p or 0.69 percent. The rupee’s previous US all-time closing low was 59.57 on June 20, 2013.

FIIs pulled out over USD 250 million from stocks on Monday, provisional data from the bourses showed.

"Rupee closed weak taking cues from strong dollar and weak equities in India. Strong month end Dollar demand from oil importers also weighed which pushed rupee again past 60.00 (futures) levels intra-day", said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).

With the rupee coming near its all-time (intra-day) low of 59.97/98 levels, "PSU banks were seen selling dollars at the behest of the RBI helping the rupee to some extent", said the Forex head of a leading private bank.

A weak rupee has a cascading effect on price rise as imports like oil become costlier amid the government trying to revive growth in the economy.

The Dollar index was up by 0.21 percent against a basket of six major global rivals. The US currency has been moving up after US Fed said it may taper off its USD 85 billion a month bond buying programme from later this year and ultimately end it 2014.

This has sparked off fears that inflows to emerging markets like India will slow down as the US economy recovers.

Global brokerage firm Standard Chartered lowered rupee forecast for the year end to 60.5 from 53 on the back of continued strength in US dollar, among other factors.

In order to arrest rupee depreciation, RBI has capacity to sell "up to USD 30 billion" from the forex reserves, according to Bank of America Merill Lynch.