Rupee Hits An All-Time Low Of 83.99, RBI Intends To Keep It Under 84

The total reserves were up by $2.30 billion at $683.99 billion and gold holdings were up by $0.86 bio at $61.86 billion

Rupee makes a new all-time low of 83.99 as importers, FPIs and oil companies continue buying while RBI ensures that it does not cross the 84 psychological level.

INR weakness is a reflection of the current realities in trade and investment as well as market perceptions on the effectiveness of Fed rate cuts.

Talking to Bizz Buzz, M.V. Hariharan, former treasury head, State Bank of India (SBI), says, “Despite the good news and thumbs up from the World Bank regarding the growth prospects, the continued assessment of the sovereign rating at BBB is in itself a signal. The outlook for further reforms is mixed given the coalition compulsions that add to the uncertainty.”

The US$/INR pair is headed further towards 84.20/$, and the RBI is currently appearing quite seriously supporting it. With the Middle East again in intense ferment, oil is a good indicator to track the trajectory of INR in the medium term. Volatile global cues also keep redrawing the bets, he said.

RBI just released the weekly forex reserves data for the week ended August 30. The total reserves were up by $2.30 billion at $683.99 billion and gold holdings were up by $0.86 bio at $61.86 billion. Anil Kumar Bhansali, Finrex, says, “Revaluation loss on non -dollar currencies was at -$3.22 billion. RBI bought a whopping $4.66 billion. The total reserves in dollars and other currencies were at $599.04 billion.”

He added, “As we have been saying repeatedly it is the RBI buying that is keeping the rupee artificially weak.”

RBI is selling dollar to prevent further slide is a myth. The central bank might have sold dollars only on some days, he said.