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Rupee smashes through 40 barrier

The rupee crossed the psychological barrier of Rs 40 level and even touched the a low level of Rs 40.80 though it ended at Rs 40.50/55.

The falling of rupee value by about 2.5 per cent did not surprise the the forex analysts and dealers as well as foreign institutional investors.

They said that it was expected and opined that the market will stablise very soon. The marginal decline in forward dollar premia already indicated in this direction, said a senior forex dealer at the leading private commercial bank.

The forward dollar premia which reported continued rise in last three days came down marginally towards the end. Dealers said that today's appeal by Union Commerce Minister Ramkrishna Hegde to the finance ministry and RBI to lower the export credit by one per cent further as against 12 per cent, had boosted exporters, dealers said and added that with the receiving pressure the forward dollar premia staged some recovery.

Speaking to UNI, Jagdish Joshi, assistant director Jardine Fleming India Asset Management Limited said diplomatic initiatives stated by India after conducting nuclear tests, will minimise the damage to the rest of the world very soon. He further said that at any cost, FII would continue in the Indian market.

A leading forex analyst said that the market witnessed volatile movement due to lot of speculation in the fear of tough sanctions on India by the European countries. However, market sources explained that these sanctions are not trade sanctions thus, they will have no effect on the trade and investment in this emerging market.

"Once the fear goes out of mind from the market participants, the market will certainly rule easy," another dealer said.

Meanwhile, the rupee registered an intraday loss of about 100 paise while dropped by over 75 paise as against yesterday's close.

The rupee tested the lowest level of Rs 40.80 after a gap of two months. It was traded above Rs 40 level on January 16 in the recent past while it gone below Rs 40 level from January 19, dealers said.

With the major fall of rupee in the interbank market, the RBI also fixed reference rate at Rs 40.38 per dollar as against Rs 39.78 per US dollar.

The six-month forward premia in percentage closed at 9.08 per cent as against 9.58 per cent, while yearly premia ended at 9.02 per cent as against 9.58 per cent.

Meanwhile, the rupee opened at Rs 39.78/79, inch higher from the previous close of Rs 39.77/78 per dollar, and immediately quoted lower (0930 hours) at 39.96/99 in absence of the State Bank of India's dollar selling support.

The rupee touched the day's low of Rs 40.80 level (1400 hours). The SBI entered the market soon after the rupee touched the day's low and started offering dollars and succeeded in bringing the rupee level to Rs 40.50/51 level at the fag end of session, forex dealers said.

Forex dealers said that the SBI today preferred to be away from active dollar selling and allowed the rupee to cross the Rs 40.00 level.

The May forward opened at 15-20 paise, touched the day's high of 20-22 paise, and finally ended lower at 12-14 paise; June closed at 43-48 after touching high of at 65-67 level; July dollar opened at 85-96, touched high of 107-111 paise, and ended at 75-80 paise; August dollar closed at 103-110 paise premium after touching day's high of 140-145 paise; September dollar also eased to 135-140 paise from high of 168-172 paise; while October dollar significantly dropped to 165-170 paise from day's high of 205-210 paise premium.

Elsewhere, the Indian rupee closed at Rs 65.74 against pound sterling, it was closed at Rs 22.83 against D mark. The rupee finished at Rs 30.22 against Japanese 100 yen.

UNI