The Hindu : Business : Rupee tumbles to new low

Online edition of India's National Newspaper
Tuesday, May 16, 2006

Business

Business

Rupee tumbles to new low

Slowdown in FII inflows drags currency

MUMBAI: Hectic all-round dollar demand amid a slowdown in foreign institutional investment inflows on Monday drove the rupee to a five-month closing low of 45.44/45 a dollar with sentiment adversely affected by selling on the stock markets that took a cue from the global meltdown.

Plunging by a steep 39-1/2 paise from last Friday's close of 45.0450/0550, the rupee had last ended at lower levels of 45.7350/7450 on December 14, 2005.

Nervousness gripped the interbank foreign exchange market from the onset of business after the rupee resumed distinctly weak at 45.10/12 and dipped to 45.1750/1850 in late morning deals following steady dollar demand.

Thereafter, a sudden dollar turnaround overseas fuelled heavy demand for the U.S. currency from all quarters. The plunge of 463 points on the BSE to one-month closing low of 11,822.28 in line with the global meltdown also adversely affected sentiment.

The rupee tumbled to troughs of 45.48/50, before settling at 45.44/45 at the closing bell, dealers said. Relatively firm global oil prices at $71.35 a barrel and a slowdown in FII inflows were the other factors behind the rupee slide to multi-month low, they added.

The Reserve Bank of India fixed the reference rate for the U.S. currency at Rs. 45.39. — PTI

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