Rupee touches one-month low

For the first time in over a month, the rupee closed below the 49 mark against the dollar as importers bought more US currency anticipating a further fall.

With the stock market indices falling for the fourth straight day there is expectation of foreign institutional investors withdrawing funds, especially in the wake of the fraud at Satyam, which has cast a shadow on Indian companies.

Besides, the US currency is also expected to appreciate as the market expects the European Central Bank to cut rates on Thursday. On Tuesday, the dollar rallied, hitting a one-month high against the euro as falling shares and weak oil prices underlined the global economic problems.

 

The rupee opened weaker at 48.975 to a dollar, compared to yesterday’s close of 48.84. It, however, recovered after Infosys Technology’s results but closed at 49.125 against the greenback.

This is the lowest close for the rupee since December 10, when it closed at 49.015. On December 2, the Indian currency had hit an all-time low of 50.62 against the dollar.

So far in 2009, FIIs have been net sellers to the tune of $230 million in the equity market on the back of $13 billion sales in 2008.

While there was demand from importers, including oil companies, public sector banks also purchased dollars.

Call rate: Little change
Call money rate ended steady around 4.20 per cent On Tuesday because supply of funds was adequate to meet banks’ demand for reserve needs, dealers said.

One-day call rate ended at 4.20-4.25 per cent compared with 4.10-4.15 per cent Monday’s close.

CBLOs ended at a weighted average rate of 3.80 per cent compared with 3.79 per cent on Monday.

Dealers said demand was on the lower side On Tuesday because banks have met much of the reserve needs in the first week itself.

“Demand was little on the lower side because banks have covered reserves in the first week itself. Also, comfortable liquidity has caused call money rate to lie close to Reserve Bank of India’s reverse repo rate of 4.00 per cent,” said a dealer at a state-owned bank.

Liquidity is expected to remain comfortable Wednesday despite an outflow of around Rs 5,800 crore towards payment of state loans auctioned On Tuesday, dealers said.

On Tuesday, RBI auctioned gilts worth Rs 5,795 crore on behalf of three states.

Owing to comfortable liquidity condition banks parked Rs 28,970 crore at RBI’s twin Reverse Repo tenders On Tuesday.

On Monday, the central bank drained Rs 28,860 crore through its twin Reverse Repo tenders.