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Rupee nosedives 61 paise to dollar after Raghuram Rajan’s exit

While the domestic equity markets seem to be towing the red line on Raghuram Rajan’s decision to go back to academia after his term comes to an end on September 4, the money markets are not taking the news well.

In early trade, the rupee, which was rescued from the then historic lows, by steps taken by the RBI Governor after he took to office in 2013, has nosedived 61 paise to 67.69 against the dollar in early trade at the Interbank Foreign Exchange.

Rajan took matters in his hands on Saturday when he penned a letter to his colleagues, putting an end to strife speculation about a second term for his at the RBI. In the letter, he said, while he was open to seeing his initiatives through, he had made the decision to go back to academia after “due reflection and after consultation with the government.”

Thus ended the speculation about his second term that has been going on for the last several weeks.

Forex dealers said besides lower opening in the domestic equity market, fresh demand for the American currency from importers also put pressure on the rupee.

They said, however, the dollar’s weakness against some currencies overseas, restricted the rupee’s losses.

On Friday, rupee had recovered 13 paise to 67.08 against the American unit on account of fresh selling by bankers and exporters and recovery in stock markets.

BSE Sensex and NSE Nifty opened in the red on Monday morning but both recovered their losses in the first thirty minutes of trade. They were towing the red line for sometime, but now it seems like all eyes are on the road ahead, as both the indices remain green. Positive cues from global markets limited the losses in the domestic market on Monday.

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