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Rupee slumps against $

MUMBAI SEPT. 16. The rupee virtually slumped against the U.S. currency today on heavy all round dollar demand, reacting to the central bank's decision to lower the ceiling on interest rates on non-resident (external) deposits to stem the rising foreign exchange inflows. Hectic dollar demand drove the rupee to a low of 45.90/92 a dollar, before settling at 45.89/90, a ten paise decline from Monday's close of 45.79/80.

Nervousness gripped the interbank forex market after the Reserve Bank of India's overnight decision to cap interest rates on NRE deposits with the rupee opening distinctly weak at 45.86/88 in anticipation of heavy dollar demand from banks, corporates and importers on fears of a slowdown in forex inflows, dealers said.

The RBI fixed the reference rate for the U.S. currency at Rs. 45.85 and for the single European unit at Rs. 51.74.

PTI

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