rediff.com: Rupee weakens to 44.56 per $ -- May 30, 2000

The rupee sank to a new record low of Rs 44.56/57 per US dollar at the interbank foreign exchange market on Tuesday.

Dealers said steady month-end dollar-demand from corporates and importers pressured the Indian currency which was in short supply.

This eroded seven paise off the rupee's Monday closing level of 44.49 which itself was a 13-paise decline over last Friday's closing level.

The rupee opened around Rs 44.51/52 per dollar, gradually dipped to intra-day lows of Rs 44.58/59, before settling at Rs 44.56/57 at the close.

Dealers said the forex spot market was relatively stable and free of unreasonable speculation.

They said dollar supplies were modest due to exporters' withholding repatriation of export proceeds for a better bargain later. This added to the pressure on the rupee.

They declined to guess at which level the Indian currency will stabilise in the absence of support-rupee measures of the central bank. Importers were also reported to be covering their open positions gradually even as dollar supplies tended to dry up, they added.

The Indian rupee stabilised in a weaker range on Tuesday morning, after a volatile opening session, taking cue from the State Bank of India's, or SBI, quotes in the market, dealers said.

The rupee slipped to 44.57/59 per dollar soon after opening around Monday's close at 44.49/51. It subsequently settled around 44.56/59 per dollar.

"The SBI's quotes through brokers were narrow and helped settle the market. The SBI apparently did not sell much, but the lower offers helped," a dealer with a French bank said.

Dealers expect underlying import demand that caused the rupee's fall both on Friday and Monday to continue.

Monday's rupee fall was largely on account of dollar purchases by an aluminium firm towards an investment and demand believed to be coming from foreign funds.

Last week, the Reserve Bank of India, or RBI, intervened when the rupee fell to its weakest level of 44.75, warning the market against speculation.

The RBI on Thursday imposed a 50 percent surcharge on the import finance rate and raised the interest on overdue export bills to 25 per cent.

It said it will continue to sell dollars through the State Bank of India and will meet foreign exchange needs towards oil imports and some government debt payments.

(c) Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.


	HOME \| BUSINESS \| REUTERS \| FOREX REPORT

Rupee sinks to new low of Rs 44.56 per $