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Rupee hits record low

The Indian rupee today sought the lowest ever level against the mighty US dollar in the interbank exchange market following massive corporates as well as speculative demands for the dollars induced by both commercial and political interest.

Opening lower at Rs 38.35, the Indian currency swiftly drifted to over around Rs 38.60-65 level, anticipating an intervention from the Reserve Bank of India. However, when the RBI did not show any concern at the falling rupee, the currency was hammered down to an all time low of Rs 38.73 per dollar in afternoon.

Later, the RBI intervened with the usual pumping of a few million dollars at various levels along with its participation in forwards deals and the rupee recoiled back to settled around Rs 38.55-60 towards the closing hours. The RBI was a receiver in the forwards as the six-month and one-year premiums narrowed down further to 110-120 paise.

Forex managers said that the rupee's weakness was mainly derived from the changed attitude of the officials who preferred to downgrade the rupee's value against the dollar gradually by at least 3 to 5 per cent in the last one month. They expected that the currency would shortly touch a level of Rs 39.50 against a dollar by end of the year.

In the absence of any direction from authorities coupled with fluid political scenario at the Centre, the rupee would come under further pressure along with volatile stock prices on the bourses.

Leading dealer said that most of the deals were dealt in the range of Rs 38.60-65. At this level, the Reserve Bank of India intervened at a bulk of 20-25 million dollars, which was absorbed by the State Bank of India, the country's largest commercial bank.

The central bank has intervened at various level including forwards for April, May and June.

The SBI was playing on both bouts: buying and selling. It also seemed that some corporate sectors were booking profit at the higher level.

Around 1600 hours, the central bank intervened again to hit the dollar which drifted lower to Rs 38.45-50, but did not last for more as soon as RBI away from the market. They started buying dollar which rose it to Rs 38.53-60, dealer added.

In the merchant sectors, importers panicked on the weakening of the dollar while exporters were enjoying the fall and expecting further decline in the Indian rupee.

In cross currency, the dollar weakened against other world major currency. The pound sterling was quoted at Rs 64.63, mark at Rs 21.92 and yen was traded at Rs 30.37 per 100.

The forward premium declined by 6.25 per cent. Cash to spot dollar was traded at level to 0.25 paisa premium. Other premiums were quoted at December 19.00-21.00, spot/Jan 40.00-43.00 paise premium, spot/March at 80.00--83.00, and spot/June was at 129.00--133.00 paise premium.

UNI