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Mumbai: Even as the rupee fell 31 paise to a six-month low of 55.42 in the foreign exchange market, bankers said that nearterm support for the domestic currency was visible on the back of capital flows and profitbooking by exporters.
"Today's fall was a function of a three developments. There was some dollar buying by a large corporate which had gone long on the rupee. There was also a dollar rally in Europe and coupled with this there was a fall in equities," said Ashish Vaidya, head of trading at UBS India.
According to Vaidya, in the short term, the rupee would find support on the back of capital flows, including expected capital infusion by Unilever which has announced a $5.4-billion open offer for Hindustan Lever shares
which starts on June 21. This would cap the rupee in the 54-55.6 range in the short term, he said. "But six months from now, at a fundamental level, I see the rupee depreciating against the dollar given the current account deficit and other macro factors," he added.
Other bankers too are forecasting a recovery for the domestic currency in the near term. "We will see some correction in the rupee tomorrow. There will be support from capital inflows. I also expect that exporters will start booking profits given that they would have gained a rupee in a few weeks," said K N Reghunathan, general manager, Union Bank of India.
"Today's fall was a function of a three developments. There was some dollar buying by a large corporate which had gone long on the rupee. There was also a dollar rally in Europe and coupled with this there was a fall in equities," said Ashish Vaidya, head of trading at UBS India.
According to Vaidya, in the short term, the rupee would find support on the back of capital flows, including expected capital infusion by Unilever which has announced a $5.4-billion open offer for Hindustan Lever shares
which starts on June 21. This would cap the rupee in the 54-55.6 range in the short term, he said. "But six months from now, at a fundamental level, I see the rupee depreciating against the dollar given the current account deficit and other macro factors," he added.
Other bankers too are forecasting a recovery for the domestic currency in the near term. "We will see some correction in the rupee tomorrow. There will be support from capital inflows. I also expect that exporters will start booking profits given that they would have gained a rupee in a few weeks," said K N Reghunathan, general manager, Union Bank of India.
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