Re Hits New Low Of 43.67

The rupee hit a historic low of 43.67 yesterday as a nervous market bought dollars both in the spot and forward segments. Lack of intervention from the Reserve Bank also fuelled the dollar-buying sentiment.

The rupee closed at 43.47-53 per dollar, against 43.32-36 on Tuesday. "The nervousness arose from the finance minister's statement on Monday that the rouble devaluation would affect the rupee, but there has been little support for the rupee," a foreign bank dealer said.

Pressure has been building up on the rupee since last week on fears of a relapse of the Asian currency crisis. The rupee has shed over two per cent since then, taking the year-on-year depreciation to almost 22 per cent from 35.7 against the dollar a year ago.

 

The Asian markets quietened, but fears persisted over the crisis, dealers said. Besides, political uncertainty arising because of the AIADMK's ambivalent stand on support to the BJP-led coalition at the Centre was an added strain, they added.

"The outlook is grim at least for the near term as can be gauged from the rather huge demand for near term dollars," a private bank dealer said.

After opening at 43.38-41, the rupee breached the 43.50 mark by 12:50 pm in thin trade, on dollar buying by the State Bank of India (SBI) and other players.

At 12:57, RBI governor Bimal Jalan issued a statement to Reuters which said the central bank was closely monitoring market movements and would take appropriate measures when considered necessary. But the rupee weakened further to 43.60 by 3:00 p m on continued demand.

Dollar buying by the SBI and other banks continued up to 43.65 following which the RBI made enquiries in the market. Soon after, the SBI turned dollar seller which resulted in the rupee recovering to the close.

The forward rupee was range-bound with near term premiums weakening on corporate cover. The one-month closed at 9.83% (9.28 on Tuesday), six-month at 9.08% (9.11), and 12-month at 9.49 % (9.55).