The Indian rupee hit a near one-year low on Friday and was at a striking distance of an all-time low, but dollar selling by some exporters and state-run banks helped the unit recover some ground. The rupee has been falling sharply since the start of May on concerns about the US Federal Reserve withdrawing its monetary stimulus and the Reserve Bank of India not cutting rates as much as previously anticipated.
The local currency has been falling for five straight weeks, taking its losses since the start of May to 5.71 percent, to make it among the worst performing currencies in Asia during this period. RBI Governor Duvvuri Subbarao warned on Friday that a high current account gap could feed into a weakening rupee and calibrating the monetary policy in such an environment was a challenge.
"Non-deliverable forwards were trading higher as there was some position building ahead of the NFP data and we saw that pushed down the rupee in the spot. Exporters, however, were happy to sell dollars above 57 levels," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
The partially convertible rupee closed at 57.06/07 per dollar compared with 56.84/85 on Thursday. It fell to 57.12 during the session, its lowest since June 27, 2012. On the week, the unit fell 1 percent, its fifth straight weekly drop. In the offshore non-deliverable forwards, the one-month contract was at 57.46, while the three-month was at 58.05. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 57.28 with a total traded volume of $5.4 billion.
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