Traders chary of predicting rupee range

Foreign exchange traders were shy of predicting a range for the rupee in the near term after the Indian currency breached the 52 per dollar mark on Monday.

The rupee closed at `52.15 against the greenback, first time since March 2009, compared with Friday’s close of 51.34, rising by 81 paise. During the day, it touched a low of 52.16.

The Reserve Bank of India’s (RBI) intervention in the forex market seems to have no impact in the falling rupee against the dollar. This is because dollar demand is far ahead of supply.

“Major demand for dollar came from oil companies for oil imports. There was also importers’ demand for covering up their near-term exposure in the forwards market,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

However, in the recent past, RBI has denied news of market interventions. “There was an intervention by the RBI even a few weeks back, even though the RBI may not come out openly and talked about it. That intervention did not work,” said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).

According to dealers, RBI does not have any level in mind for intervening in the market. “They will intervene in the market just to curb volatility. The market information is they have been in the market all this while,” said Mohan Shenoi, head of treasury, Kotak Mahindra Bank.

There are a few market players who feel the RBI is yet to intervene. “I think at some stage the RBI will come in. The RBI is conscious of the fact that when they sell dollar they are sucking in rupee from the market. If they suck in further rupee from the market, then liquidity will become tighter, rates will go up further and that will have implications on growth,” said A V Rajwade, currency and interest rate risk management consultant.
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Traders chary of predicting rupee range
The street does not seem to be bullish about rupee’s movement  in the next few days. “There will be some support to the rupee at the all-time low level of 52.18 (touched in March 2009). But if it breaches that level then there is possibility that it could go to 54 per dollar,” said Shenoi.

While others feel we shouldn’t lose too much more from here. “Maybe 52.50 per dollar, but that is about it,” said Parthasarthi Mukherjee, president (treasury and international banking), Axis Bank.

According to Brahmbhatt the trading range for rupee against the dollar during the week will be 51.50-52.80.