Search the Internet          Tips  Sites: Finance, Investment

Rupee declines to 48.02/$

The rupee declined sharply against the US currency on Thursday, pulled down by renewed all-round dollar demand following the downgrading of India's sovereign ratings by the international credit rating agency Fitch.

In fairly volatile trade at the Interbank Foreign Exchange market, the rupee closed at Rs 48.0225/0275 per dollar, 5 paise depreciation from Wednesday's finish of Rs 47.96/97 after testing intraday lows of Rs 48.0400/0450.

It opened weak at Rs 47.98/99, reflecting the cut in the country's sovereign ratings and also to the adjusted spot date Monday because of Thursday's Thanksgiving Day holiday in US.

"Once the rupee broke through the key resistance level of 48.00-dollar, banks rushed to cover short-dollar positions and pushed the rupee down to 48.04/05 in late afternoon deals. Shortage of dollar supplies because of the Thanksgiving Day holiday in US also exerted downward pressure on the rupee," a forex dealer said.

"However, many banks later unwound long dollar positions, allowing the rupee to partially bounce back," he added.

Close on the heels of Standard & Poor's reafirming its rating on India with a negative outlook, Fitch has downgraded the country's foreign and local currency ratings to 'BB' and 'BB+' respectively, from 'BB+' and 'BBB-'.

Fitch cited "continued fiscal profligacy" and an unfavourable political environment, which was hindering economic reforms.

Reserve Bank of India fixed the reference rate at Rs 48.02 per dollar, as against Rs 47.97 Wednesday.

In cross currency trades, the rupee eased marginally against euro but rallied against the British sterling.

The domestic unit ended lower against the single European currency at Rs 42.16/18 per euro from Wednesday's finish of Rs 42.13/15 after opening around Rs 42.10/12.

It firmed up against the sterling to end higher at Rs 67.86/88 per pound from Rs 68.03/05 after opening weak at Rs 68.06/08 per pound.

Tell us what you think of this report