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Rupee plummets to fresh 1-yr low vs USD

Last updated on: September 9, 2011 19:35 IST

Rupee plummets to fresh 1-yr low vs USD

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The rupee on Friday tumbled by a whopping 37 paise to end at a fresh one-year low of 46.56/57 against the US currency due to a steep fall in local stocks amid a firm dollar overseas.

Sustained dollar demand from importers and slow down in capital inflows too weighed on the rupee.

In a fairly active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit opened lower at 46.26/27 a dollar from Thursday's close of 46.19/20.

Later, it moved down further in line with equities to a low of 46.5850 before settling at 46.56/57, showing a fall of 0.80 per cent.

Earlier, it had finished at 46.63/64 on September 8, 2010. In straight five sessions, the local unit fell by 77 paise or 1.68 per cent.

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Image: An employee counts rupee notes at a cash counter inside a bank in Agartala.
Photographs: Jayanta Dey/Reuters
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Alpari Financial Services (India) CEO Pramit Brahmbhatt said, "Local equity markets ended weak by almost 2 per cent at near its weakest level in a year which depreciated the rupee more than 0.75 per cent. Fall in Euro and Dollar demand from oil importers also helped dollar to gain against rupee."

Continued dollar demand from importers and some banks on expectation of further rise in US dollar overseas put pressure on the rupee, he added.

"Yesterday's ECB president Jean-Claud Tichet's comments explicitly accepting a weakness in the European economy with low growth prospects for the Euro zone encouraged risk aversion in the markets.

Also, the Swiss franc being pegged at 1.02 levels against the Euro reduced the safe haven alternatives thus strengthening the dollar across the globe," India Forex Advisors CEO Abhishek Goenka said.

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Image: An employee of an money exchange counts US dollar bills in Tokyo.
Photographs: Yuriko Nakao/Reuters
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The dollar index, a gauge of six major currencies, was up by 0.48 per cent while New York crude oil was trading just above $88 a barrel in European market on Friday.

The Dollar Index has reached an 8 week high. Many eminent people have ridiculed president Obama's job creation proposal of $447 billion on Thursday but if implemented according to the plan it can definitely dent unemployment.

Dollar is gaining strength globally on the back of risk aversion and the levels of 46.70 can be easily targeted the next week," he added.

Meanwhile, the Bombay Stock Exchange benchmark Sensex on Friday snapped its three-day gaining string and plunged by 298.57 points or 1.74 per cent at 16,867.

FIIs picked up shares worth $6.36 million on Thursday, as per Sebi data.

The rupee premium for the forward dollar fell back on fresh receivings by exporters.

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Image: A bank employee counts bundles of currency.
Photographs: Jayanta Dey/Reuters
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The benchmark six-month forward dollar premium payable in February ended lower at 78-2/1-80-1/2 paise from Thursday's close of 83-86 paise and far-forward contracts maturing in August also declined to 136-138 paise from 143-1/2-146-1/2 paise previously.

The RBI fixed the reference rate for the dollar at Rs 46.3843 and the euro at Rs 64.4825.

The rupee moved down further against the pound sterling to end at Rs 74.27/29 from Thursday's close of Rs 74.03/05 and also softened against the Japanese yen to Rs 59.87/89 per 100 yen from Rs 59.83/85 previously.

It, however, strengthened to Rs 64.30/32 per euro from last close of Rs 64.85/87.


Image: A man deposits money in a bank.
Photographs: Reuters
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