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Rupee down by 12 paise against dollar
May, 23rd 2008

The rupee on Thursday fell by 12 paise to 42.95/96 a US dollar, recovering somewhat from below 43 level it reached during the day, on fears that erupted after crude oil rose to a record.

Global crude oil prices spiralled to a new record high of above $135 a barrel, raising worries of further upward pressure on inflation.

In a two-way trade at the Interbank Foreign Exchange (Forex), the local currency resumed sharply lower at 43.06/07 and dipped further to a low of 43.20, the level not seen since first week of April, 2007.

Month-end dollar demand from oil refiners and importers also weighed on the rupee sentiment.

But, it recovered later to end at 42.95/96 a dollar, still lower from overnight closing level of 42.83/84.

Dealers attributed late recovery in the rupee to some dollar selling by exporters, who took the opportunity to book profits at higher level.

Sluggish equity markets

Sluggish equity markets also pushed the rupee downward. The benchmark Sensex closed 336 points down. In Asia, barring the Nikkei, most other Asian indices remained distinctly weak following steep fall on Wall Street on Wednesday.

Worries over the possibility of worsening trade deficit that might forced the apex bank to further tighten monetary measures also put pressure on the rupee.

The Reserve Bank on Thursday fixed the reference rate for US dollar at Rs 43.15 and that for single European unit at Rs 68.10.

The rupee premiums on forward dollar continued to move upward and ended strong on sustained paying pressure from banks and corporates.

The benchmark six-month forward dollar premiums payable in October ended at 39-41 paise, higher from 34-35-1/2 paise on Wednesday and the far-forward maturing in April also improved further to 54-1/2 - 56-1/2 paise from 52-1/2 - 54-1/2 paise previously.

Cross currency trade

In cross currency trades, remained bearish and dipped further against the British sterling, the euro and the Japanese yen.

The rupee tumbled against against the pound sterling to end the day at Rs 85.22/24 per pound from last close of Rs 84.18/20 per pound and also eased against the single European currency to Rs 67.67/69 per euro from overnight close of Rs 67.50/52 per euro. 

The Indian unit declined against the Japanese yen to close at Rs 41.60/62 per 100 yen from previous close of Rs 41.49/51 per 100 yen.

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