Rupee sees volatile movements, touches life’s low at June-end

The year saw some volatile movements in the local currency in the first half of the year. It eventually more-or-less stabilised on measures taken both by global central bankers and policy makes back home.

The rupee opened the year with a bias to appreciate as Reserve Bank of India pulled all stops to save the rupee from hitting record lows by minimising speculation earlier in the year. The central bank banned rolling over of forward contracts and put limits on net overnight open positions, among other measures. But it weakened, as oil and gold prices rose, and so did the demand for dollar from the importers.

The local currency weakened by almost 3.09% this year against the greenback, weighed down by slowdown in exports due to muted global demand. It touched a life’s low of 57.30 towards end June, but later recovered to even below 52 by October.

The concerns over rupee have still not ended as the trade deficit widened to an all-time high of $21 billion in October due to weak exports. Portfolio flows have not been sufficient to fund the dollar demand putting a pressure on local currency.