Rupee at two-year low, breaches 67 mark

The rupee hit an over-two-year low on Thursday as a host of factors, including a global equity sell-off, tumbling crude oil prices and a strengthening dollar weighed on it.

The Indian unit closed at 67.29 to the dollar, a level last seen in September 2013. It ended the day weaker by about 44 paise over the previous close of 66.85.

The rupee opened almost 10 paise weaker over the previous close and touched an intra-day high of 66.95 and a low of 67.30.

Market players say nationalised banks sold dollars, apparently at the behest of the central bank, to prop up the domestic currency.

Meanwhile, the benchmark 30-share BSE Sensex ended 81 points down at 24,772.97. While foreign institutional/portfolio investors net sold shares aggregating ₹1,222 crore, domestic institutional investors net bought shares aggregating ₹1,526 crore.

The rupee had touched an all-time low of 68.85 against the dollar on August 28, 2013.

Forex dealers expect the domestic currency to trade in the 66.75-67.50 range in the coming week. They say that the rupee is overvalued on a real effective exchange rate basis.

As on January 1, 2016, India’s forex reserves stood at about $350 billion. Since end-March 2015, the country saw an accretion of $8.7 billion to the reserves. The RBI’s half-yearly report on management of foreign exchange reserves said that the import cover of India’s reserves increased to 9.8 months as of September 2015 from 8.9 months in March 2015.