Sunday 9 March 2008

Rupee hits nearly six-month low

Continuing its weakness after a brief pause, the Indian rupee hit a nearly six-month low of 40.52/53 against the greenback on March 7 on good dollar demand from banks and oil companies amidst the softening of US currency and sluggish stock markets. The Indian unit has not seen this level since September 17, 2007 after resuming weak at 40.37/39 a dollar compared to its last close of 40.29/30 a dollar. Earlier last month, the rupee had breached the 40-mark level against the dollar for the first time in five months.

The domestic currency has depreciated after gaining by about eight paise in the last two sessions. Forex dealers said banks and oil refiners bought dollars even as Asian stocks fell to their recent lows after global oil prices held near record highs keeping overall pressure on dollar. Meanwhile, the Indian benchmark Sensex tumbled by more than 560 points, or 3.42 per cent while Asian indices dipped by about 1.0 to 3.0 per cent in early trade.

The Reserve Bank also fixed the reference rate for dollar at Rs 40.53 and for the single European unit at Rs 62.40 per euro. The rupee premiums on forward dollar ended sharply higher due to paying pressure from banks and corporates. The benchmark six-month forward dollar premiums payable in August ended at 5-1/2 - 7-1/2 paise, up from 2-1/2 - one paisa discount on Wednesday and Far-forward maturing in February closed remarkably higher at 17-1/2 - 19-1/2 paise from 8 - 10 paise previously. In cross-currency trades, the rupee also weakened against the British sterling, the euro and the yen.

The rupee tumbled against the sterling and ended the day at Rs 81.57/59 per euro from its last close of Rs 79.74/76 per pound and also fell sharply against the Single European currency to Rs 62.42/44 per euro from its previous close of Rs 61.17/19 per euro. The local currency dipped against the Japanese Yen to close at Rs 39.76/78 per 100 yen from Wednesday's close of Rs 38.88/90 per 100 yen.