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Rupee downslide continues

Updated October 23, 2017

In the domestic currency market, no major development was witnessed last week week macro-economic indicators.

However, some improvement was seen in the country’s forex reserves after the government reportedly borrowed $450 million on a short-term facility from a Credit Suisse led consortium of commercial banks.

But widening trade deficit and rising debt servicing is weighing on the country’s forex reserves and exerting pressure on the rupee.

On the interbank market, trading both ways in narrow ranges, the rupee/dollar parity fluctuated between Rs105.40/42 and Rs105.41/44.

On Monday the rupee traded at Rs105.40 and Rs105.41 against the previous week’s closing levels of Rs105.34 and Rs105.36.

But widening trade deficit and rising debt servicing is weighing on the country’s forex reserves and exerting pressure on the rupee

The rupee remained depressed against the dollar on Tuesday trading at Rs105.41 and Rs105.42.

However, on Wednesday the rupee managed to recover overnight losses when the dollar reverted to Rs105.40 and Rs105.41.

The rupee again turned negative on Thursday and was seen changing hands at Rs105.41 and Rs105.42.

On Friday the downslide continued at Rs105.42 and Rs105.44.

In the open market, the rupee/dollar parity witnessed mixed pattern last week.

The rupee commenced the week on a firm note against the dollar. On Monday it changed hands at Rs106.80 and Rs107.00 against the last closing at Rs106.90 and Rs107.00.

On Tuesday, the rupee retained its overnight level unchanged and traded flat at Rs106.80 and Rs107.00.

The dollar rebounded sharply against the rupee on Wednesday trading at Rs107.00 and Rs107.20.

The rupee downslide against the dollar continued on Thursday with the rupee slipping to Rs107.20 and Rs107.40, its lowest level since August 2.

On Friday the rupee staged a modest recovery at Rs107.10 and Rs107.30.

The euro remained on firm ground against the rupee for the second straight week.

Commencing the week flat at Rs125.75 and Rs127.00, the parity did not show any change over the previous week close amid sluggish trading activity.

On Tuesday the rupee failed to hold weekend firmness slipping to Rs125.40 and Rs126.65.

On Wednesday the rupee continued its downslide against the euro closing at Rs125.50 and Rs126.75.

Gaining further strength against the rupee, the euro the continued its upward advances, hitting one week high at Rs126.50 and Rs127.75 on Thursday. The rupee closed the week against the euro at Rs126.30 and Rs127.80.

Published in Dawn, The Business and Finance Weekly, October 23rd, 2017