February 18 2020
Rupee dips below 53 to four-month low
03 May 2012

MUMBAI: The rupee slipped below 53 to the dollar on Thursday, touching a new four-month low, tracking losses in Asian shares and a faltering euro on concerns about the strength of a global recovery. 

The rupee fell to a low of 53.18/19 againt the dollar. It closed at 52.96/97 on Wednesday, as reported. 

On Monday, the RBI intervened in the rupee forwards market to offset the liquidity impact of its spot selling, some dealers said. 

State-run banks were seen selling dollars when the rupee broke below 53, four dealers said, adding that it was likely on behalf of the Reserve Bank of India

The value of international investors' holdings in the Indian market has eroded by $9 billion in the past month when the rupee slid 4% against the US dollar, a calculation by ET shows. This is in contrast to a near $40 billion notional gain in the first quarter when the rupee was the best performing currency in the region. Experts are indicating that the Indian currency is likely to remain under pressure in the next few months. 

"Foreign investors are somewhat worried about their Indian holdings because the weakness in the rupee does not appear to be just a short-term concern. The huge trade deficits and high inflation differentials with our trading partners, in addition to the potential consequences of GAAR, could result in the rupee dropping further in the foreseeable future," UR Bhat, the Managing Director of Dalton Capital India, said. 

Infosys Technologies, the darling of global investors, was the biggest drag on investor wealth, with the stock losing more than 14% of its value in the rupee, which translates into a loss of $215 million. 

FIIs, once the main drivers of the Indian market, have turned negative on Indian equities since April 1. After investing over Rs 43,951 crore, or over $8.85 billion, in the first three months of 2012, pulled out Rs 1,109 crore, or $206 million, from equities in April. According to Sebi data, FIIs also withdrew Rs 3,788 crore, or $721 million, from the debt market in April 2012.



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