The rupee closed today at 43.84 per dollar, its lowest since December 27, 2004, and sharply down from yesterday's close of 43.52/53, as banks rushed to cover positions. | |
| The greenback's overseas rally and a crash in shares prices added to bearish sentiment in the foreign exchange market. |
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| Foreign banks bought dollars anticipating a further appreciation in the American currency. Meantime, government securities prices fell across the board in the range of 25-40 paise following the announcement of the state loan sale. |
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| The ten-year benchmark 7.38 per cent 2015 paper closed at 6.57 per cent, which is 10 basis points higher than the Tuesday close of 6.47 per cent. |
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| According to a foreign exchange dealer, the spot rupee tracked the dollar globally where it gained against all major currencies. |
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| The dollar rose from 1.3350 to 1.3241 as part of technical correction versus the euro, the dealers said. |
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| The dollar had earlier reached a seven-year high of 43. 37/38 to a dollar on the back of foreign exchange inflows following dollar bearishness. |
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| "Today most of the foreign banks bought dollars on behalf of custodian clients who were liquidating positions in the equity markets," said a PSU bank dealer. |
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| Players said the correction will continue for some time and the short-term outlook for the dollar will be bullish even if the long-term sentiment is bearish given the huge deficits in the United States. |
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| Meanwhile, 20 states are set to sell 7.02 per cent development loan 2015 for a total Rs 6,000 crore on January 11. This, too, dampened sentiment on Wednesday. |
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| The RBI received Rs 38,000 crore bids under reverse repo and call rates ruled at 5 per cent. |
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| Dealers are of the view that with the announcement of the auction, most of the banks who were overbought pressed the panic button leading to heavy selling in gilts. |
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