Demand for US currency from importers and investors due to Greek debt crisis

Published on in Foreign Exchange News by

The Rupee has dropped against the dollar for a seventh day in a row hitting a new record low of 56.38 on Thursday morning. There is strong demand for the US currency from importers and investors due to the continuing Greek debt crisis.

It seems clear that the actions taken by the Reserve Bank of India have failed to halt the rupee’s downward drop. The dollar continues to make gains against the Euro and many other major currencies, putting extra pressure on the struggling Indian currency.

The rupee resumed lower at 56.20 per dollar against Wednesday’s closing level of 56, and dropped further to an all—time low of 56.38 per dollar at 10:45 Indian time.

Dealers said increased dollar demand from importers, especially oil refiners coupled with capital outflows from foreign funds, kept pressure on the rupee value against the dollar even as selling of the American currency by exporters and banks failed to check persistent fall.

Elsewhere the Dollar has continued to strengthen against the embattled Euro and is expected to continue to do so until European Union’s leaders decide on an effective strategy to deal with the ongoing crisis. Last night the leaders met for the 18th emergency summit and once again no firm action was decided upon, spooking markets and failing to impress investors worldwide.

“We want Greece to remain in the euro area while respecting its commitments,” Mr Van Rompuy told a news conference in Brussels.

“We are fully aware of the significant efforts already made by the Greek citizens.” The leaders basically agreed that there was a problem… and that’s it.

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