Rupee closes above 68-mark, weakens by 17 paise

Mumbai, Jan 28 (IANS) The Indian rupee continued on its downward trajectory for the third consecutive session on Thursday.

The rupee closed above the 68-mark against the US dollar during the day’s trade, at level which was last seen during early September, 2013.
It weakened by 17 paise at 68.23 to a US dollar from its previous close of 67.05-06 to a greenback.
“A late surge of demand for USD from option sellers on US dollars, looking to rebalance delta risk, triggered a sharp upward move towards 68:25 levels on spot by close of trading,” Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
The weakness in the rupee value indicates the massive outflow of foreign funds from the Indian equity and debt markets.
The foreign institutional investors (FIIs) were net sellers during the day’s trade. According to data with stock exchanges, FIIs divested Rs.961.82 crore.
According to Hiren Sharma, senior vice president, currency advisory at Anand Rathi Financial Services, the rupee’s fell on the back of US Fed’s commentary which hinted at a March hike in interest rates.
The US Fed during its FOMC (Federal Open Market Committee) meet gave a bearish outlook on global markets and cautioned against future financial shocks.
However, it maintained status quo in interest rates.
“Not so dovish statement from US Fed (though sighting global concerns) has impacted equities and currencies today. Month end buying, F&O (futures and options) expiry led to rupee slide,” Sharma told IANS.
“On a threshold of a key resistance it closed at. Rupee surely in a critical situation.”
On technical levels, rupee has got a good support at 67.90, a closing below this level may start the recovery rally in the Indian currency.
“In near term spot can move lower, if there is a closing below 67.90-mark which will hold the downside and market might move higher from there towards 68.50,” said Hemal Doshi, chief currency strategist, Geofin Comtrade.
“Next major trigger will be the Reserve Bank of India’s (RBI) monetary policy review slated for next week.”
In addition, the slide in rupee’s value unnerved investors and dipped equity indices.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed flat — lower by just 23 points, or 0.09 percent, at 24,469.57 points.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) ended the day’s trade flat. It inched down by 13.10 points, or 0.18 percent, at 7,424.65 points.