Sustained demand for dollars pushed the rupee to a new low of 55.39 to the dollar on Tuesday.
The demand for dollars came from foreign institutional investors, who were selling their equity investments in India, and oil companies, which wanted to pay for crude oil imports. Further, short-covering also accentuated the demand for dollars.
The rupee is down by 14 per cent from the February low of 48.60.
Opening stronger at 54.65 (against the previous close of 55.0350) due to curbs imposed by the Reserve Bank of India to curb arbitrage between the over-the-counter and currency futures/options markets, the rupee saw an intraday low of 55.46 during the course of the day's trading.
“The strong market forces (acting against rupee) will make it tough for the RBI to defend extended rupee weakness into 56.50-57.00.
“We have completed 60 per cent of the journey (from 52 to 57) in one month's time and may not rule out faster pace for the remaining 40 per cent of the journey towards 57,” said Mr Moses Harding, Head – ALCO and Economic & Market Research, IndusInd Bank.
RBI’s various measures to arrest the rupee fall has yielded little results.
The call rates touched an intra-day high of 8.30. The last traded rate was 8.30.
The benchmark 8.79 per cent 2021 Government Security touched a high of Rs 101.75 before closing at Rs. 101.72.