Rupee tumbles all time low to close 59.68/$

Mumbai (PTI): Month-end dollar demand from oil importers and hefty FII outflows dragged the Indian rupee down on Monday by 41 paise to close at new life-time low of 59.68, amid speculation that RBI stepped in to check the currency slide touching nearly 60-mark. At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 59.55 a dollar as against last weekend's close of 59.27. It continued its downslide to a low of 59.83, before recovering some ground to settle at 59.68 -- still showing a fall of 41 paise or 0.69 per cent. The rupee's previous all-time closing low was 59.57 on June 20. FIIs pulled out over $250 million (Rs 1,552.98 crore) from stocks on Monday, as per the provisional data from the bourses. "Rupee closed weak taking cues from strong dollar and weak equities in India. Strong month end dollar demand from oil importers also weighed which pushed rupee again past 60 (futures) levels intra-day," said Pramit Brahmbhatt, CEO, Alpari Financial Services. With the rupee coming near its all time (intra-day) low of 59.97/98 levels, "PSU banks were seen selling dollars at the behest of the RBI helping the rupee to some extent", said forex market sources. A weak rupee has a cascading effect on price rise as imports like oil become costlier amid the government trying to revive growth in the economy. The dollar index was up by 0.21 per cent against a basket of six major global rivals. The US currency has been moving up after US Fed said it may taper off its $85 billion a month bond buying programme from later this year and ultimately end it 2014. This has sparked off fears that inflows to emerging markets like India will slow down as the US economy recovers. Global brokerage firm Standard Chartered on Monday lowered rupee forecast for the year end to 60.5 from 53 on the back of continued strength in US dollar, among other factors. In order to arrest rupee depreciation, RBI has capacity to sell "up to $30 billion" from its forex reserves, according to Bank of America Merill Lynch. Euro falling towards $1.3078 levels against dollar also contributed to the fall in rupee. For June so far, FIIs have offloaded shares and debt securities worth over $5 billion. The economic logic for foreign funds to invest in domestic debt instruments is withering away as yield differentials are narrowing fast, say traders.

RBI can sell $30 bn to hold rupee: Merill Lynch Mumbai (PTI): In order to arrest rupee depreciation, RBI has a capacity to sell up to $30 billion from the forex reserves and may go for a NRI bond issue to mop-up up to $20 billion, foreign brokerage Bank of America Merill Lynch said on Monday. "We expect the RBI to eventually mobilise $20 billion via NRI bonds, a la 1998 Resurgent India Bonds and 2001 India Millennium Deposits, as the sell-off of emerging market debt should constrain the ability of FII debt limit hikes to raise forex reserves," it said, adding that the central bank can sell up to $30 billion to support the rupee. The BofAML report said that five year money can be raised by issuing the 7 to 9 per cent coupon bonds to stabilise markets, just as it was done in 1998 and 2001. The country's banks had raised $4.8 billion and $5.5 billion from the bonds targeted at the diaspora during the economic crisis years in 1998 and 2001, respectively. BofAML also expects RBI will defend rupee when it reaches Rs 60 to a dollar level.