Rupee hits new record closing low

Tuesday, 29 September 2015 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The rupee closed at a fresh record low on Monday as dollar selling by exporters helped the currency recover from a record intra-day low, offsetting demand for the greenback by importers, dealers said.

Earlier, the spot currency fell 0.3% to touch a record low of 141.40, surpassing its all-time low of 141.00 hit last Tuesday.

The rupee closed at 141.25/30 on Monday.

“The rupee is still under pressure due to import demand and no real dollar inflows,” said a currency dealer, asking not to be named.

Dealers said regulations were needed to make exporters convert their export proceeds.

Central Bank Governor Arjuna Mahendran said on Monday he expected the rupee to stabilise only after a rate increase by the US Fed, likely by year-end.

“Rupee fairly valued,” the governor said. “It is left to market forces to determine where it should be. That’s the whole message.”

The rupee has fallen 4.7% since the Central Bank effectively floated it on 4 September.

The rupee float has won a thumbs-up from rating agencies and economists, but more reforms will be needed to support the currency and conserve the central bank’s modest reserves.

The Central Bank on 15 September imposed a 70% limit on loans and advances for vehicles, a move seen aimed at curbing demand for credit and stemming dollar outflows.