Rupee at 5.5 year low
The rupee slid to its lowest in more than 5-½ years on Monday as local
shares dived nearly 6 percent, triggering fears of an accelerated outflow of foreign funds, while dollar demand from importers and oil firms weighed. The partially convertible rupee ended at 47.80/81 per dollar, 1.5 percent weaker than its 47.0750/0850 at close on Friday. It slumped to 47.85 during the session, its lowest since Feb. 14, 2003.
The rupee has lost 17.6 percent so far this year. "The rupee was very volatile today, the Sensex was down. The dollar is stronger overseas. Importers and oil firms were buying dollars and there are no dollar inflows," said K.N.Reghunathan, a currency trader at state-run Union Bank of India.
"If this trend continues then we may see the rupee touch 49 against the dollar in the near-term," he added. India's main share index or Sensex ended down 5.8 percent as concerns grew of an acceleration in foreign fund withdrawals amid fears the credit crisis could lead to a global recession.
Foreign funds have pulled out a net $9.4 billion from Indian
stocks so far in 2008 after buying a record $17.4 billion last year. Oil fell below $90 a barrel to its lowest in eight months, pressured by expectations that the global credit crisis would bring a sharp fall in oil demand.
Oil is India's biggest import and lower
oil prices prompted refiners to make purchases at current levels, pushing up dollar demand and pressuring the local unit lower. Dealers said the central bank was seen selling dollars through state-run banks at various levels to prop up the rupee, but the demand for dollars was too large.
Source: -
Rupee at 5.5 year low as shares slide- Forex-Markets-The Economic Times
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