rediff.com: Rupee closes at record low of 44.29/$

The Indian rupee sank to a record low of 44.29 to the dollar on Thursday at close, marking a third day of losses seen as unusually large for a currency convertible only on the current account.

The rupee fell to as low as 44.78 per dollar during intra-day trade, slipping further from the day's opening levels of 44.15/17 and its previous record closing low of 44.145/155 on Wednesday.

"As of now it appears to be more of inter-bank demand. We have not seen much of corporate demand," a dealer at an American bank said.

Dealers said the country's largest commercial bank, the State Bank of India , had not sold dollars despite the rupee's fall and this had the market confused about the Indian currency's direction.

"The rupee has broken a sideways consolidation pattern and I see it hitting a level of 44.80 (per dollar) in the near term with the possibility of a 45.50 target being reached over the next 2-3 weeks. We are very bullish on the dollar versus the Indian rupee," said Jackin Lo, technical analyst, global treasury research, Standard Chartered Bank, Hong Kong, commenting on the rupee's fall.

"I think we should be nearing the top (for the dollar). The correction should get here. Between here and 45 (per dollar), this should stop," opined Munish Saigal, controller of foreign exchange operations, Ranbaxy Laboratories.

SBI, which is viewed by local dealers as a surrogate of the central bank, usually sells dollars on volatile days to temper the rupee's fall.

"SBI, if anything, has been quoting along with the market. The market had been expecting the authorities to defend 44.20 levels," the dealer at the American bank said.

The rupee's recent fall has been triggered by mounting dollar demand from importers in a market which has seen dollar supplies from foreign funds dry up reflecting their sales in the stockmarkets.

"I do not think the RBI will be concerned about a soft weakening of the rupee given the fact other Asian currencies have fallen much more against the dollar. However I do not see the rupee breaching the 44.25 mark," a treasury economist a foreign bank said.

Forward premiums were sharply up tracking the spot rupee and the tight liquidity conditions in the money market.

The six-month premium rose to an annualised 3.16 per cent against Wednesday's close of 2.83 per cent.

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