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Rupee at new closing low of 48.28/$

The rupee closed at a record low on Tuesday despite recovering from intra-day troughs as state-run banks bought dollars apparently on behalf of the Reserve Bank of India, dealers said.

The rupee ended at 48.2700/2800 per dollar, surpassing its previous record closing low of 48.2650/2750 hit on January 1 and 4.

Traders said early dollar purchases by state-run banks pushed the rupee down to an intra-day low of 48.30 in stray deals and forced other banks to go long.

They said the dollar purchases showed the RBI was not in favour of the rupee appreciating as this could affect India's export competitiveness, especially after the recent weakness in the Japanese yen and other regional currencies.

Analysts say the local currency is overvalued by nearly two per cent on a trade-weighted basis.

Traders said steady dollar sales by custodial banks, which offer services to foreign funds, and exporters in later deals helped the rupee rise from intra-day lows, but the gains were capped by state-run banks.

Dollar inflows in recent sessions have been boosted by exporters' remittances, investments by overseas funds and foreign companies wanting to buy back shares of their Indian subsidiaries.

Forwards, especially in the near term, fell on Tuesday tracking comfortable conditions in the money market, but longer maturities rose slightly on news of a fresh federal bond auction announced after the close of trading on Monday.

The three-month forwards ended at 6.14 per cent, down from Monday's 6.17 per cent, while the one-year forwards closed at 5.94 per cent, up from the previous 5.92 per cent.

The finance ministry announced on Monday a yield-based auction of 15-year government stock for Rs 50 billion, which will be conducted by the RBI on January 14.

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