The Indian rupee Monday touched a record low of 55 against the dollar because of the strong demand for dollar from importers, weak global cues and delay over policy reforms from the government.
The rupee touched the key psychological level of 55 per dollar Monday afternoon. The drop marked one percent loss from Friday's close of 54.42/44.
Nevertheless, the traders said there were no signs of the Reserve Bank of India's intervention in the market despite the crucial fall in rupee's value. The RBI was intervening in the Forex market to defend the rupee in recent weeks.
Forex analysts feel that the pressure on the rupee is not going to ease in recent days, as the euro zone crisis and weak markets are weighing in.
Rupee continues to depreciate since the dollar is appreciating against all emerging market currencies. We are continuously seeing rupee under pressure, Nischal Maheshwari, Head Research, Edelweiss, said in an interview to CNBC-TV18.
Continue Reading Below
Apart from the strong dollar globally, the foreign fund outflow and India's trade deficit also dragged the rupee down.
The Bombay Stock Exchange's benchmark Sensex and the National Stock Exchange (NSE) Nifty gained Monday following the European markets which registered an upward movement. German DAX and Britain's FTSE climbed over 0.5 percent while France's CAC rose 1 percent in the first session.
The Sensex gained 133 points in the early day trade and NSE benchmark was up 43 points. However, the weak rupee that touched record low erased most of the day gains as markets closed with a nominal gain. The Sensex gained 30.51 points to end at 16183.26 marking a 0.19 percent change and the Nifty gained 0.30 percent or 14 .60 points to 4,906.05.
The BSE Midcap Index was up 0.63 percent and the BSE Smallcap Index moved 0.99 percent higher.
Banking and real estate shares gained in Monday's trade as the State Bank of India, which posted a better than-expected net profit of Rs 40.50 billion in its fourth quarter, went up by 3.37 percent or Rs 65.40 to reach 2007.40. Private lenders ICICI Bank and HDFC Bank were up 1% and 0.5% respectively.
The other major Sensex gainers were Tata Power that gained 4.65 percent, Reliance Infrastructure (5 percent), Maruti Suzuki (3.29 percent), capital goods company BHEL (2 percent), construction company Larsen & Toubro and realty major DLF by 2 percent each.