Rupee depreciates for fourth consecutive session; hits three week low

Indian rupee, depreciating for fourth consecutive session, hit a three week low on Tuesday on account of RBI’s intervention, which apparently bought dollars via state run banks, while importers' buying also added to the losses. The local currency had briefly strengthened early in the day when the Reserve Bank of India (RBI) kept interest rates steady and signaled it may be done with rate hikes if the economy stays on this course and would have room for rate cut if disinflation was faster than currently anticipated. Nevertheless, little impact was drawn from central bank’s move to allow banks to equally spread out additional provisioning on un-hedged foreign currency exposure in the current fiscal year. On the global front, euro recovered from lows on Tuesday, after subdued euro zone inflation data kept alive the expectations of aggressive monetary stimulus from the European Central Bank, much of which is already priced in by investors.

Finally, the rupee ended at 59.40, weaker by 24 paise from its previous close of 59.16 on Monday. The currency touched a high and low of 59.42 and 59.12 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 59.21 and for Euro stood at 80.56 on June 3, 2014. While, the RBI’s reference rate for the Yen stood at 57.88, the reference rate for the Great Britain Pound (GBP) stood at 99.1691. The reference rates are based on 12 noon rates of a few select banks in Mumbai