The rupee breached for the first time the 79 level in post-market trade on 29th June. The fall came even as the Reserve Bank of India (RBI) managed to defend the domestic unit from breaching the milestone level earlier in the day for most of the trading hours. Dealers said that there were post market trades at the 79.02 level as the dollar continued to gain strength globally.
The domestic currency has lost almost 6% during the current year with a third of the losses in the month of June. Dealers said that there was demand from multinational banks on behalf of foreign institutional investors, while public sector banks purchased dollars for importers including oil companies. The RBI was understood to be selling the greenback through public sector banks.
It is the oil prices which will determine the worsening current account deficit. Unless oil prices really come off, there is no reason for the rupee to reverse its movement,” said DBS Bank head (treasury & markets) Ashish Vaidya. While the weakening of the rupee has accelerated in June, the movement has been orderly. The RBI has managed to ensure that there are no wild swings in the exchange rate by selling billions of dollars from its reserves.