Rupee slide to continue; RBI unlikely to intervene

With the dollar gaining ground against major currencies like the euro,the rupee is expected to further weaken in the short term.

With the dollar gaining ground against major currencies like the euro,the rupee is expected to further weaken in the short term. On Friday,the Indian currency weakened 1.05% to 46.7425 against the greenback at the close,and for the week on a whole it weakened by 1.22%. Analysts believe the downward trend in rupee will continue for a while.

Says Madhusudan Somani,head of foreign exchange trading at YES Bank,Going forward,one can expect some pressure on the rupee given a correction in the equity markets and an increase in the global risk aversion. Somani adds in the last few days,there has also been a lot of dollar demand from the oil companies which is leading to further weakness in rupee.

We expect the rupee to touch 46.85 in the coming days, observed Somani.

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While rupee is expected to decline further,dealers do not believe RBI would intervene in the forex market to prevent the rupee from further depreciating.

Rupee movement is more to do with the global factors and is temporary. Hence,we do not believe there would be a significant impact, said C Chandrasekhar,senior VP at Mecklai Financial. On Friday,the data released by the Reserve Bank of India (RBI) showed that the countrys foreign exchange reserves have fallen by $1.98 billion to $280.96 billion for the week ended January 29.

Foreign currency assets and gold reserves too observed a fall. While foreign currency assets fell by $1.72 billion to $256.4 billion,gold reserves fell by $236 million to $18.1 billion.

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