The Hindu : Business : Rupee plunges to five month low against dollar

Online edition of India's National Newspaper
Wednesday, Feb 20, 2008
ePaper | Mobile/PDA Version

Business

Business

Rupee plunges to five month low against dollar

Scarce supply of dollar dampens sentiment

MUMBAI: The Indian rupee nosedived by 13 paise against the greenback on Tuesday to close at its five-month low of 39.90/91 as heavy demand for dollar continued to pour in from domestic banks amidst the U.S. currency’s scarce availability globally.

On record capital inflows last year, the domestic currency had appreciated by more than 12 per cent in calendar 2007.

At the interbank foreign exchange market, the Indian unit fell to the intra-day low of 39.94 a dollar after resuming steady at 39.75/77. It had fallen by ten paise to close at 39.77/78 on Monday.

Forex dealers said besides a strong demand for the greenback amid its insufficient supply, other factors such as slowdown in capital inflows and absence of dollar sales by exporters dampened rupee sentiment. One dealer said exporters were keeping the dollar with them despite a marked erosion in the currency’s value against the dollar. They said all-round dollar buying marked the day on the exchange market.

A dealer with a public sector bank said that the bank made a large single purchase of dollars for a defence-related payment.

In view of continuing demand for dollars investors were taking long dollar positions, dealers said. Meanwhile, Asian equity markets were firm while Indian benchmark Sensex pared its initial losses and closed the day in the positive zone. The benchmark Sensex closed at 18075.66, marginally up by 27.61 points.

The rupee continued to remain under pressure due to FII pullout from equity. Foreign institutional investors (FIIs) pulled out more than $700 million from the equity markets last week.

The rupee premiums on forward dollar closed further down on acute shortage of dollars.

The Reserve Bank of India, however, fixed the reference rate for the U.S. currency at Rs. 39.87 and for the single European unit at Rs. 58.59.

In cross-currency deals, the rupee reacted downwards against the British pound sterling, the euro and the Japanese yen. — PTI

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section