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Tuesday, April 17, 2001

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Rupee crosses 47-mark

By Our Special Correspondent

MUMBAI, APRIL 16. The rupee closed at a historic low of 47.02 to a U.S. dollar today. It also touched an all-time low of 47.05.

The Indian currency opened lower at 46.92/94 compared to its previous close on Thursday at 46.81/84 and weakened further on resumption of dollar buying by corporates and banks. In the opening session, it fell sharply to 47.01/03 before dollar sales by state-run banks and some foreign banks possibly acting on behalf of foreign portfolio investors checked its further slide. It recovered to 46.95/96 during the mid-session when the nostro inflows improved supplies and demand waned.

However, during the closing hours, the rupee slipped to fresh lows on renewed dollar demand. It slid from 46.96/98 to 47.05 and closed at 47.02.

``The dollar buying was probably propped up by a reported statement from the Union Finance Minister that the depreciation of the rupee is to be viewed in the context of other currencies depreciating against the dollar,'' said Mr. N. Subramanian of eMecklai, a leading foreign exchange dealing firm in Mumbai. Mr. Sinha had also said the Reserve Bank of India would curb the volatility but would not intervene on day-to-day fluctuations.

``The market has perceived this to be a green signal for whipping the domestic currency down to levels near 47.50 thereby correcting the overvaluation in real terms, but in a disciplined manner,'' Mr. Subramanian added. In late trades, the rupee was quoted at 47.04/05 a dollar.

The forward premium turned easier as higher spot levels attracted forward sales by exporters. The benchmark six-month premium fell to 4.93 per cent during afternoon trade before closing at 4.97 per cent compared to Thursday's close of 5.09 per cent.

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