The Reserve Bank of India (RBI)’s intervention in the currency market helped the rupee close on a stronger note on Friday, despite increasing dollar demand from oil marketing companies (OMCs) and importers.
On Friday, the rupee closed at 62.87 a dollar, compared with its previous close of 62.94 a dollar. It opened at 62.90/dollar and touched a high of 62.84/dollar and a low of 63.08/dollar in intra-day trade.
“RBI had been intervening in the market since morning and due to the intervention through state-run banks, the rupee ended strong,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
N S Venkatesh, chief general manager and head of treasury, IDBI Bank, and chairman of Fixed Income Money Market and Derivatives Association of India, said, “There was dollar buying from state-run banks to cater to the needs of OMCs, due to which the rupee weakened. Also, there was dollar buying from foreign banks.”
Since the beginning of this financial year, the rupee has weakened about 15 per cent. Since the beginning of this month, it has fallen about two per cent.
Next week, the rupee could weaken further, as month-end dollar demand from importers grows. “The rupee may touch 64 a dollar next week due to dollar demand from importers and concern of US Federal Reserve tapering,” said Gonsalves. Venkatesh said, “The rupee may trade between 62.70-63.15/dollar next week. The fair value of the rupee should be between 61and 62. Currently, it is slightly overvalued due to dollar demand from OMCs.