COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Rupee wakes up to political uncertainty, plunges to Rs 42.86/88 vs $

Owint to the political uncertainty after the fall of vajpayee government, the Indian rupee fell sharply by 38 paise by surpassing Rs 43.00 to the US$ level during intra-day trading. The rupee posted a sharp decline of 15 paise against the US$ by touching an eight-month low amidst volatile trading at the interbank foreign exchange market today.

The rupee opened sharply lower after two holidays, at Rs 42.87/89. Immediately, it came under severe pressure on hectic dollar buying by corporates coupled with speculative import covering. The rupee fell to Rs 43.10 level.

However, State Bank of India entered the market in a bid to arrest the rupee's fall and sold substantial amount of dollars at Rs 42.87/90 level. The Reserve Bank of India preferred to be away from the market, dealers said.

Cautious importers bought dollars heavily fearing danger to Budget. However, the market stabilised after receiving reports that the Budget would be passed without debate on Wednesday, dealers said.

The rupee ended at Rs 42.86/88 as against the last Friday's close of Rs 42.72/73, losing its value by 15 paise against the greenback.

The far forward premia rose sharply by 9-10 paise from the previous levels while the near forward premia ended marginally higher.

Fall of the rupee was expected by the marketmen since the market remained closed on saturday when the Vajpayee government was voted out in Parliament, dealers said.

According to senior forex dealer at Mecklai and Mecklai Fnancial Company, the rupee is likely to be under pressure for a few days till the uncertainty is lifted over the formation of new government. It is upto the new leaders and their views on rupee's depreciation, the dealer said.

The market will not react much positively to the RBI's Credit Policy tomorrow in view of the political uncertainty, dealers said.

The RBI has also revised the reference rate for US dollar by nine paise at Rs 42.85 from Friday's rate of Rs 42.76 per dollar.

Cash/spot ended at 1.00-1.25 paise premium while cash/tomorrow conducted at 0.50-0.75 paise premium. The month-wise premia in paise were: April 4-6, May 26-29, June 50-53, July 73-76, August 98-101, September 125-129, October 155-158, November 185-188, December 215-218, January 245-248, February 271-275 and March 298-302.

In the cross currency, the rupee declined against pound sterling and Japanese yen while it remained nearly steady against euro. The Indian unit ended against sterling at Rs 69.32 (Rs 68.73), against yen at Rs 36.35 (Rs 36.06) and euro at Rs 45.62 (Rs 45.65).

UNI

Business news