Negativities, absent RBI take Re to a 100-day low

Negative sentiment and a hands-off Reserve Bank of India (RBI) meant the rupee closed at 52.70 per dollar, the lowest level since January 9, on Tuesday. That’s after plunging as low as 52.86 per dollar.

“Foreign institutional investors are pulling out of equities due to tax issues. Moreover, banks may be importing more gold because of Akshaya Tritiya,” said Mohan Shenoi, group head treasury, Kotak Mahindra Bank.

Traders were also talking about a possible relaxation of the forward booking norms which were introduced by the RBI in December to support the rupee.

“The decision by Macquarie’s Asia hedge fund to quit its short position in Indian single stock futures added to the negative emotions,” said Pramit Brahmbhatt, chief executive officer, Alpari Financial Services, a forex consultant.

Global worries also weighed heavy.

“If you look at December, there was no logical reason for the rupee to have fallen that much, however now, you can cite a hundred,” said a senior official with an international bank, who did not wish to be named.

Experts were chary of giving a trading range going ahead and they do not see the RBI intervening actively.

“The rupee’s bounceback will depend heavily on how the GAAR tax issue pans out, as this will help in determining FII flows,” said Moses Harding, head of AlCo, and economy & market research, IndusIand Bank.