Rupee depreciates 22 paise to 68.68 vs US dollar, nears all-time low of 68.85


NEW DELHI: The rupee depreciated 22 paise to 68.68 against the US dollar on Monday, despite positive cues from most Asian currency markets.

The domestic currency had settled last week at 68.46. The rupee had hit an all-time low of 68.85 on August 28, 2013.

On Monday most Asian currencies advanced against the greenback. Among the major gainers were the Taiwanese dollar (up 1.10 per cent), the Korean won (0.32 per cent), the Indonesian rupiah (0.22 per cent) and the Singapore dollar (up 0.06 per cent).

Dollar index that tracks the movement of dollar against a basket of six major world currencies was, meanwhile, up 0.23 per cent at 96.82.

Some experts remained bearish on the rupee for the entire 2016.

“I am bearish on the rupee this year for a few fundamental reasons. The inflows (equity) are now negative. They will either remain flat or negative this year as redemptions are happening across emerging markets. However, debt route should be good and enough money should be coming in provided debt (investment) limit (for foreign portfolio investors) is increased. The rupee could be under pressure and may depreciate to 70-71 to a (US) dollar,” said MS Gopikrishnan, Head of FX, Rates & Credit Trading, StanChart.

Data available with NSDL showed that FIIs have pulled out equities worth Rs 15629 crore so far this year. In February, the outflows amounted to Rs 4,500 crore. This has been the only second Budget month after 2011, when FIIs are sellers on a net basis.

“We have seen some chatter in the media about the RBI depreciating the INR by buying FX. We point out that the increase in FX reserves since January essentially reflects revaluation effects. Headline FX reserves bottomed in the week of January at $347.2bn. Since then, headline FX reserves have increased by about US$4.3bn to US$351.5bn on February 5. We estimate that the RBI, in fact, has sold $0.7bn since mid-January,” said Bofa-ML in a note.

“Given the intensity of the current EM risk off, it is unlikely that the RBI will be able to buy FX in March. If the US dollar were to weaken significantly, of course, portfolio flows will return in search of INR gains,” the BofA-ML report said.