Brexit: Rupee slumps, RBI swings into action
The intervention is wide spread both in futures and spot market, dealers said, as only spot market intervention would suck out the rupee liquidity from the market.
By Saikat Das, ET Bureau | Updated:
MUMBAI: The Rupee has weakened more than 1% against the dollar Friday morning trades mirroring global currency market mayhem after UK decided to break away from the European Union in a referendum.
At 9.20 hours the local unit trades at 68.18 a dollar after opening at 67.91. It closed at 67.25 Thursday.
"Currency markets may now see unprecedented slides, and the rupee is not immune to it," said Anindya Banerjee, currency analyst at Kotak Securities. "UK's exit was unexpected sending shock waves across markets."
The Reserve Bank of India, which was fully prepared to curb intraday market volatility, has swung into action as some state-owned banks are seen selling dollars heavily.
The intervention is wide spread both in futures and spot market, dealers said, as only spot market intervention would suck out the rupee liquidity from the market.
International banks already warned their customers about keeping positions open in the currency market over Brexit uncertainties as any adverse outcome could lead to a tight liquidity situation leading to spike in rates.
Jittery global investors are mostly seen existing emerging markets including India as they seek safety of dollar-backed assets. The trend may sustain for few weeks, dealers said.
Large private sector lenders including ICICI, HDFC Bank and Axis Bank kept the currency trading desk through the night and early down to serve their corporate clients, willing to bet amid swings.
Ends.
At 9.20 hours the local unit trades at 68.18 a dollar after opening at 67.91. It closed at 67.25 Thursday.
"Currency markets may now see unprecedented slides, and the rupee is not immune to it," said Anindya Banerjee, currency analyst at Kotak Securities. "UK's exit was unexpected sending shock waves across markets."
The Reserve Bank of India, which was fully prepared to curb intraday market volatility, has swung into action as some state-owned banks are seen selling dollars heavily.
The intervention is wide spread both in futures and spot market, dealers said, as only spot market intervention would suck out the rupee liquidity from the market.
International banks already warned their customers about keeping positions open in the currency market over Brexit uncertainties as any adverse outcome could lead to a tight liquidity situation leading to spike in rates.
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"The Rupee has showed early signs of weakness in the offshore market as the exchange rate dipped to 67.90 a dollar following UK referendum trends," said Keta Kurkute, an analyst from Mecklai Financial, a currency broking firm. "The domestic spot market has only reflected the mood when it opened amid overseas fund outflows."Jittery global investors are mostly seen existing emerging markets including India as they seek safety of dollar-backed assets. The trend may sustain for few weeks, dealers said.
Large private sector lenders including ICICI, HDFC Bank and Axis Bank kept the currency trading desk through the night and early down to serve their corporate clients, willing to bet amid swings.
Ends.
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