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Rupee drops another 30 paise as panic stays on course

The rupee opened lower at Rs 41.45/50 and continued to rule in the same range for most part of the day as the State Bank of India took active part by conducting two-way business of selling and buying dollars till 1415 hours.

After SBI's departure, the market witnessed hectic dollar buying by corporate and banks to cover up the position expecting further fall in the rupee value, which pushed down the rupee to yet another low of Rs 41.75/77 before closing at Rs 41.68/70 against the previous close of Rs 41.37/40.

Dealers said that yesterday's five nuclear tests conducted by the Pakistan in reply to India's nuclear tests has affected market sentiments inititally.

However, the RBI ruled out any possibility of financial implication of the Pakistan's nuclear tests on India. In statement issued in Bombay in the morning, the central bank said, "The RBI is closely monitoring the market developments including forex markets. It would take such action as may be necessary to ensure continued orderly conditions."

Meanwhile, the rupee has depreciatated by about 102 paise during this week after Standard and Poor's revision of India outlook from 'stable' to 'negative ' last week and the world bank's indefinite postponment of loans to India. The rupee, which was quoted at Rs 40.65/67 on last Friday, crashed to Rs 41.68/70 till today.

A nominal amount of merchant booking was done in near forwards, dealers said. The six-month annualised premium and yearly-premium quoted higher at 9.11 per cent and 9.04 per cent against the previous quote of 8.55 and 8.81 per cent respectively.

Forward dollars also went up. Cash/spot was quoted at 1 and 1.25 paise premium while the cash/tom 0.50-0.75 paisa premium.

The monthwise premiums were June 28-31 paise, July 57-61 paise, August 90-94 paise, September 120-125 paise, October 155-160 paise, November 186-190 paise and December 219-223 paise.

In other major curriencies, the pound sterling strengthened, while Deutsche mark and Japanese yen weakened against the US dollar. The rupee declined marginally against the sterling, DM and yen and quoted at Rs 67.97 per sterling, Rs 23.39 per DM, and Rs 30.02 per 100 yen.

The Reserve Bank of India has fixed the reference rate for dollar at Rs 41.50 as against Rs 41.29 on the previous day.

UNI