Forex software companies like FXCM, had to adjust for the heightened volatility of the market

After poll results in Greece and France there has been a sustained demand for US currency

The rupee today closed at all-time low of 53.84 losing a hefty 72 paise against dollar due to sustained demand for the US currency which rose sharply against major rivals after poll results in Greece and France fueled fresh eurozone worries.

Forex dealers said signs of strong capital outflows also weighed against rupee sentiment. They further said that rupee is expected to breach the 54 level by weekend given the current global situation.

RBI is believed to have intervened when the rupee fell to 53.80 level but could not stem the fall.

At the Interbank Foreign Exchange (Forex) market, the rupee opened lower at 53.54 per dollar and fell further to intra-day low of 53.85 per dollar. It closed at 53.84 per dollar, showing a loss of 72 paise. The previous lowest closing was at 53.71 on December 14, 2011.

“The fall in rupee today is due to three factors. Firstly, dollar strengthened against other currencies, especially euro, and secondly, a weak stock market contributed towards the rupee fall,” J Moses Harding, Head of Global Markets Group of IndusInd Bank.

Euro fell to over three-month low against dollar on fears that Greece could leave the eurozone.

With Greece’s Sunday general election results throwing up no clear winner, US dollar gained today amid Alexis Tsipras, leader of the Radical Left Coalition claiming that the verdict renders the Greek bailout deal null.

On rupee fall, Indian Overseas Bank GM (Treasury) T S Srinivasan said, “Rupee has seen weakness today in sync with euro weakening against dollar. Today’s fall is more due to international factors than domestic. Also, subdued capital flows to equity market had contributed to the fall.”

Rupee may breach 54-level in the near term given the persistent weakness in the currency, he added.

On RBI’s intervention, Harding said given the liquidity condition, there is not much scope for RBI to intervene.

Source: Business Standard

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