The rupee fell 5 paise to 66.60 against the US dollar in trade on Thursday. Many experts believe that the upside is capped for the domestic currency in the near term.The rupee had ended lower 13 paise lower at 66.55 on Wednesday amid fresh dollar demand from banks and importers.
Thursday’s fall was in line with weakness seen in other Asian currencies. The Malaysian ringgit was down 0.35 per cent, the Philippine peso 0.30 per cent and the Taiwanese dollar 0.11 per cent.
Last week, the index was on the verge of hitting 2016’s high off 66.14 (January 1, on a closing basis) but it failed.
“Rupee is probably topping out. Global concerns could be back once again. There is a fear that the Fed might hike interest rate and June can be a possibility. The Chinese has thrown huge about in stimulus in hopes of demand coming back. The demand has come back but is not sustainable. We expect that stimulus impact fade out from the H2 and concerns will start mounting once again.
All through the last two month, the RBI has been mopping up dollars whenever the rupee has appreciated to around 66.5,” said Anindya Banerjee, currency analyst at Kotak Securities.
Experts believe the referendum on Brexit on June 23 and the direction of commodity, especially crude, would play an important role in influencing the rupee movement in near future.
So far, even as the rupee has managed to cut almost entire losses it made against the US this year, the currency is still the worst-performing major Asian currency.
The domestic currency is down half a per cent against the US dollar so far this year, against a 12.48 per cent surge in the Japanese yen, 7.86 per cent 4.71 per cent rise in Taiwanese dollar and 4.08 per cent gains in the Indonesian rupiah.