The rupee fell by 21 paise or 0.3 per cent to slip past 68 per dollar on Wednesday. At its day low, it traded at 68.04 against its previous close of 67.83 per dollar.
The rupee has been under pressure, tracking sustained selling by foreign institutional investors in stock markets. FIIs have sold equities worth over Rs 10,500 crore so far in January.
TS Harihar of HRBV Client Solutions told NDTV Profit that the Reserve Bank’s approach towards rupee seems to be “calibrated” which is in stark contract to what happened in 2013, when the currency crashed from 55 per dollar to a record low above 68 within months.
“RBI’s reserves have gone down by $4.5 billion, which indicates that the central bank has been supporting the rupee around 68/dollar,” said Mr Harihar.
Analysts are optimistic about the rupee despite the weakness seen over the last few months. Rohit Srivastava, fund manager at Sharekhan told NDTV Profit that the rupee is unlikely to breach September 2013 lows of 68.85 against the greenback.
“The rupee has reached the upper end of a rising channel over the last year or so… Upside potential should be limited and a correction to 67 looks possible,” Mr Srivastava said.
India Ratings and Research expects the rupee to remain volatile through the week. (Read)
“The rupee movement is likely to stay volatile as central bankers’ policy decisions especially US Fed’s will influence the global risk appetite. In event of a cautious assessment of global conditions by the Fed, emerging economies will gain in the near term,” Ind-Ra said.
As of 09.45 a.m., the rupee traded at 67.9950 per dollar.