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Rupee depreciates further to strike fresh 32 month low on Wednesday

16 Nov 2011 Evaluate

Indian rupee depreciated further on Wednesday to hit a new 32-month low on continued dollar demand from importers, while a bruised euro and local equities on fears Europe's debt crisis was spreading to top-rated members also weighed on the local unit. Brewing Italian debt woes has mainly raised uncertainties over the effectiveness of the austerity measures for European debt crisis. Italy’s solvency is crucial to the future of the euro currency shared by 17 nations because the country - with euro1.9 trillion ($2.6 trillion) in debt - is too expensive to rescue from a default.

However, despite the sharp fall in the rupee's value, traders remain unsure whether the Reserve Bank of India (RBI) will intervene aggressively to shore up the local currency. On Monday, a deputy central banker said the RBI was not contemplating a policy change towards rupee. Subir Gokarn said the bank would intervene only if there was extreme volatility in the foreign exchange market.

The partially convertible currency is currently trading at 50.92, weaker by 25 paise from its previous close of 50.67 on Tuesday. It has touched a high and low of 51.01 and 50.84 respectively. The Reserve Bank of India's reference rate for the dollar stood at Rs 50.56 and for Euro it stood at 68.7875 on November 15, 2011. While, the RBI's reference rate for the Yen stood at 65.60 and the reference rate for the Great Britain Pound (GBP) stood at 80.2990. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Date1US$1GBP
November 15, 201150.56 80.2990
November 14, 201150.08 80.3631
RBI Reference Rate

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