Rupee tumbles in volatile trading

MUMBAI, MAY 14. A late burst of heavy dollar short- covering by banks sent the rupee tumbling down to close at 46.9650/9750 a dollar in fairly volatile trading at the inter-bank foreign exchange market here today.

The rupee depreciated by a whopping nine paise from last Friday's finish of 46.8800/8850 after banks, suddenly caught short towards the closing bell, rushed to cover dollar positions.

A prominent European bank started actively biding the greenback towards the fag end of the day which prompted other State-run banks to scramble to cover dollar positions, taking a heavy toll of the rupee value, dealers said.

The rupee opened on a weak note at 46.8950/9050 following Saturday's cut in the cash reserve ratio by 50 basis points to 7.5 per cent.

``The late bout of dollar short-covering came as a surprise, as the dollar-demand emanated from a few foreign banks that spread to the public sector banks, taking the rupee to 46.9650/9750 and within striking distance of all-time closing low of 47.02/04 struck on April 16," a dealer said. ``It appears that a few foreign banks were in a hurry to cover positions immediately after the announcement of a ban on carry forward by the Securities and Exchange Board of India (SEBI)," he added.

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