The Indian rupee ended the year with its biggest annual loss since 2008 as foreign capital took flight on growing concerns about India's current account deficit, its poorly performing stock market and an uncertain global economic outlook. Only, suspected intervention by the Reserve Bank of India kept the rupee from falling sharply in the last few sessions, traders said.
Thin liquidity due to the end of the quarter and RBI curbs on speculation have amplified moves in the currency, they said. A weak stock market and month-end dollar demand from oil importers, the biggest buyers of dollars in the local foreign exchange market, also weighed on the currency.
The rupee closed at 53.08/09 to the dollar, marginally down from Thursday's close of 53.07/08. For all of 2011, it closed down 15.8 percent, compared with a fall of 19.1 percent during the global financial crisis in 2008. The rupee hit a record low of 54.30 on December 15, after which the RBI imposed curbs on banks' trading limits to help rein in speculation on the currency.
"The key events to watch are the developments in euro zone," said Mohan Shenoi, head of treasury at Kotak Mahindra Bank in Mumbai. One-month offshore non-deliverable forward contracts were quoted at 53.30, indicating more weakness was likely in the spot rate in the short-term. In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were trading around 53.49, with the total volume at $2.9 billion.
Comments
Comments are closed for this article.