The Hindu : Business : Rupee loses 31 paise on resurgent dollar overseas

Online edition of India's National Newspaper
Thursday, Jan 06, 2005

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Rupee loses 31 paise on resurgent dollar overseas

MUMBAI, JAN. 5. Breaching key resistance levels, the rupee today lost another 31 paise to close at 43.8250/8350 a dollar, pulled down by sustained heavy dollar demand fuelled by a resurgent dollar overseas amidst rising global oil prices with sentiment turning distinctly weak.

Nervousness gripped the interbank foreign exchange market from the onset of business after frenzied dollar demand drove the rupee to a low of 43.85/86 minutes before the closing bell, before settling at 43.8250/8350, dealers said.

The rupee opened sharply lower at 43.72/75 against Tuesday's close of 43.52/54 due to the dollar's sustained rally against major global rivals, mainly the Euro. It lost six paise yesterday, adjusting to a downward correction from five-year peak of 43.45/47 struck at the close of trade on December 31, 2004.

A technical dollar recovery overseas, for the third straight session, fuelled hectic all round dollar demand, which took a further toll on the rupee value.

Rising global oil prices at over $43 a barrel and a warning from global rating agency Standard & Poor's that the country's high fiscal deficit and debt burden could hamper economic growth also exerted downward pressure on the rupee, dealers said.

The rupee hit a five-year closing peak of 43.45/47 on the last day of 2004 on the back of robust FII inflows into the booming stock market.

"The FIIs appear to be selling their rupee assets in the bourses and converting them into dollars to repatriate to their parent body overseas, resulting in sharp erosion in the value of the rupee," a forex dealer said. — PTI

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