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Rupee turns weak as American currency strengthens

20 Jul 2015 Evaluate

Indian rupee weakened against dollar in the early trade on Monday as the American currency strengthened in the overseas market. Besides, increased demand for the dollar from importers and a lower opening in the domestic equity market also weighed on the local currency. However, persistent foreign capital inflows into the equity market cushioned the rupee's fall to some extent. Meanwhile, the Reserve Bank of India, which has stockpiled enough dollars to cover more than 10 months of the country's imports, is changing its strategy in the foreign exchange (FX) market. Given that it is in favour of lowering market interest rates, the RBI has bought more dollars in the spot market and dramatically reduced purchases of the US currency in the forward market. On the global front, the dollar hit a three-month high against a basket of major currencies on Monday, after solid US inflation and housing data supported expectations for the Federal Reserve to raise interest rates in coming months.

The partially convertible currency is currently trading at 63.55, weaker by 8 paise from its previous close of 63.47 on Friday. The currency touched a high and low of 63.5675 and 63.53 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 63.49 and for Euro stood at 69.14 on July 17, 2015. While, the RBI’s reference rate for the Yen stood at 51.20, the reference rate for the Great Britain Pound (GBP) stood at 99.4297. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Date1US$ 1GBP
July 17, 201563.4928 99.4297
July 16, 201563.495599.1736

(RBI-Reference Rate)

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