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Rupee's slide continues

The downslide of the Indian rupee continued unabated as it lost further ground against the US greenback in a wide-range and volatile trading at the interbank foreign exchange market on Tuesday.

The fluctuations were apparent as the rupee opened at Rs 36.45/48, and dropped to a low of Rs 36.54 in the early hours of trading, but recovered during the latter part of the day, closing at Rs 36.48/50. The rupee showed a net loss of 8-9 paise from the previous close of Rs 36.40/42..

Forex dealers discounted a drastic fall in the value of the Indian rupee due to the oil price hike announced on Monday, but maintained that a gradual depreciation will take place due to higher demand in the coming months, bringing about a correction in the interbank rupee rate.

The Reserve Bank of India intervened in the market at Rs 36.50 level, and sold moderate quantity of dollars in both spot and forward sections, but heavy demand from corporates and outward remittances on account of payment obligations prevented the rupee from recovering. According to dealers the apex bank was actively selling for February.

State Bank of India, which was actively buying the US dollars during the last few days, was simply bidding in the market, implying its nominal participation.

Cash spot closed at 0.75-1.25 paise premium while tom-spot ended at 0.25 -0.50 paise premium. Forward premiums closed at 19-21 paise premium for September, 43-46 paise for October, 65-67 paise for November, 92-95 paise for December, 114-117 paise for January, 132-135 paise for February, and 152-156 paise for March.

Commenting on the wide spread between buy/sell quotes during times of volatility, Dayanand Nayak, chief forex dealer of Corporation Bank, said that a liquidity crunch forces the banks to increase the spreads. "If the rupee is ruling at Rs 36.50 and we sell at Rs 36.45, there will be no takers as even the corporates are better informed about the market," he remarked.

Elsewhere, the RBI fixed the reference rate at Rs 36.47 per dollar as against Rs 36.37 on Monday.

The pound closed at Rs 58.29, Deutsche mark at Rs 20.05/08, and the Japanese yen at Rs 29.97/30.00 per 100 units.

In overseas trading, good movements were witnessed as the dollar depreciated against all major currencies, dealers informed.

UNI