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Rupee touches record low of Rs 41.22, ends 30p lower at Rs 40.97

The rupee reacted sharply by plunging 30 paise during intraday trading against the American dollar in a panicky session, characterised by heavy dollar buying by corporates and short covering by banks at the interbank foreign exchange market in Bombay today.

Opening at Rs 40.75-77, the Indian unit breached the Rs 41 mark during the day, but improved through the day to close at Rs 40.94/97 as against the previous close of Rs 40.63/65, still a steep loss of 30 paise.

The State Bank of India was purchasing heavily in the before the midsession, but sold dollars during the latter part of the day.

The six-month annualised premium and the yearly premium were quoted higher at 9.08 per cent and 8.58 per cent.

S&P had changed its outlook on India's sovereign rating, while maintaining the country's current rating of BB+, which is a notch below investment grade. It has also retained the country's local currency rating of BBB+.

The change in outlook by the international credit rating agency was prompted by the imposition of economic sanctions by the US and other countries in response to the nuclear tests carried out by the country last week.

S&P negative outlook reflects the "erosion of India's external financial position" as a result of the sanctions.

A good amount of merchant booking was reported in near and far forward market, dealers said.

Forward dollars also zoomed up as importers booked heavily to cover up their positions. The monthwise premiums, in paise, were May 0.5-1.5, June 31-36, July 61-66, August 93-98, September 126-131, October 159-163, November 191-196, and December 220-227.

The rupee also weakened against the pound sterling and Deutsche mark and ended at Rs 66.72 per sterling as against Rs 66.33 the previous close, and at Rs 23.25 against the mark as compared to Rs 23.07 last Friday.

However, the Indian unit remained almost steady against the Japanese yen at Rs 29.93 (Rs 29.95) per 100 yen.

The Reserve Bank of India fixed the reference rate for US dollar at Rs 40.92 as against Rs 40.63 of previous working day's rate.

UNI