Re sees biggest fall in 6 weeks, closes at 48.02 against dollar

The rupee fell the most in six weeks as importers stepped up purchase to meet their dollar needs, while others, including banks, opted to take buy the US currency, which gained last week.

The Indian currency declined 1.6 per cent to 48.02 against the dollar, according to data compiled by Bloomberg. The rupee touched 46.86 in intra-day trading on December 19, the highest since October 3. The rupee has appreciated over 8 per cent from an all-time low of 50.615 on December 2.

But the 17.8 per cent loss so far in 2008 is the steepest depreciation since 1991 when the rupee was devalued in the wake of the balance of payment problems.

 

The rupee opened weaker in line with other currencies such as the Japanese yen and the Euro, which had gained last week.

The yen declined to as low as 90.23 against the dollar in Tokyo from 89.31 late in New York on Friday. The Japanese yen had touched a 13-year high against the dollar before it gained on a government statement that the authorities may have to intervene to keep the country’s exports competitive.

Dealers said that there was demand from importers, including petroleum companies, who purchased dollars to meet their month-end payment requirements.
 

COVERING THE LOSSES Currency per dollar
	2-Jan-08	22-Dec-08	% change
Korean won	936.95	1309.45	-39.76
Indian rupee	39.44	48.02	-21.77
Indonesian rupiah	9386.00	11050.00	-17.73
Thai baht	29.75	34.54	-16.10
Malaysian ringgit	3.31	3.48	-5.17
Taiwan dollar	32.45	32.96	-1.57
Singapore dollar	1.44	1.45	-0.81
Hong kong dollar	7.81	7.75	0.79
Source : Bloomberg

India’s imports have increased over 37 per cent during the current financial, partly due to a fall in the rupee, which was trading below 40 against the dollar a year ago.

With the markets ending lower, the demand for rupee also went up, the dealers said.

Offshore non-deliverable forward contracts showed traders increased bets for how far the rupee will fall in a month. The contracts indicate the rupee will trade at 48.35 a dollar a month from now, compared with expectations for a decline to 47.65 on Friday.

Forwards are agreements in which assets are bought and sold at current prices for future delivery. Indian rupee forwards traded overseas are non-deliverable, meaning they are settled in dollars rather than the local currency.In the currency futures market too, the rupee gained in line with the spot market.