Mumbai, Aug 19
The Indian rupee on Wednesday
touched a new two-year low of Rs.65.44 to a dollar during intra-day
trade on the foreign exchange markets.
The rupee, however, later gained strength recovering to Rs.65.11 and closed the day's trade at Rs.65.24 to a dollar.
Wednesday's
intra-day fall mirrors the currency's movements on the off-shore
markets on Tuesday -- where it had hit a fresh two-year low at Rs.65.47
to a US dollar.
The domestic interbank foreign exchange markets
were closed on Tuesday on account of the Parsi New Year. The rupee's
previous close stood at Rs.65.32 to a dollar.
"The ripple effects
of yesterday's rupee position in the off-shore markets were seen in the
domestic markets today. However, the rupee made a healthy come back and
ended lower than the previous close," Hiren Sharma, senior vice
president, currency advisory at Anand Rathi Financial Services told
IANS.
The major catalyst for the rupee's fall has been the devaluation of yuan, intended to boost Chinese exports.
China's
central bank devalued yuan by two percent on August 11. This was the
biggest devaluation in the Chinese currency since 1994.
The currency fell again by another two percent on August 12 panicking the world economy.
The measure to devaluate the yuan is seen as an attempt to arrest the implosion in the Chinese markets.
The
attempt is also view as a measure to corner the international export
markets from other emerging trading powers such as India and the Asean
(Association of Southeast Asian Nations) grouping.
The move has strengthened the dollar value, which has negatively impacted major world currencies including the Indian rupee.
The yuan has fallen by 4.6 percent till now since August 11.
The
world markets are fearful of the fact that the $10 trillion
dollar-worth Chinese economy has the ability to dump unlimited amount of
goods and services, thereby cornering the entire international exports
customers.
Analysts pointed out that the minutes of the last
Federal Open Market Committee (FOMC) meet which will be released later
today will be the next trigger for the rupee movement.
"The
movements in the Chinese markets and the minutes of the FOMC will be
watched closely," Anindya Banerjee, senior manager for currency
derivatives with Kotak Securities, told IANS.
Speculations are
rife that given the new scenario of yuan devaluation, stalled reforms,
deficient monsoon and high interest rates, the RBI's comfort range
regarding rupee has moved up between Rs.64.20-Rs.65.30 per dollar.
The
Reserve Bank which has been pretty active in the forward purchase
markets since the last 22 months was earlier seen comfortable with the
rupee ranging anywhere between Rs.63.20-Rs.64.30 per dollar.
At
that time the central bank used to sell dollars -- whenever the rupee
crossed the Rs.64-mark and buy when it fell below Rs.63.
