The Indian finance ministry stated its concern over the limited ability of Reserve Bank of India to mediate with the forex market to cease the fall in rupee, considering the decline of the Indian rupee to a 32-month low of Rs. 51.50 per US dollar in the initial trade. Department of Economic Affairs Secretary R Gopalan supported this view, "RBI's ability to intervene in forex market is limited".
In the early trade, rupee fell 16 paise to Rs. 51.50 against the dollar on the Interbank Foreign Exchange because of sustained demand for the American currency from banks and importers. The domestic currency had tumbled 44 paise to Rs. 51.34/35 per dollar in the previous session on heavy demand and firmness of the American currency overseas.
Meanwhile, dealers believed that the demand dollar had from some banks and importers, especially oil refiners, reflected on the value of rupee. They further added that the concerns over foreign fund outflows from the domestic equity market and the increase in demand of dollar from state-run oil refiners has bought a decline to the magnetism of the rupee.
Source: http://ndtv.profit.com
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