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Rupee rallies after a sharp dip

Our Bureau

MUMBAI, Sept. 17

THE Indian currency plunged to a lifetime low of 48.43 to the dollar today, before recovering sharply to end the day at 47.82/83, as the forex market moved in tandem with the equity and bonds markets.

Dealers said the rupee which opened at 47.83/85, breached 48 level immediately on higher dollar demands. They linked dollar outflow with the pull out of FIIs in the equity market. But there was rush for dollars by importers to cover their positions. Deal ers ruled out any speculative demand.

As the rupee got weaker, some public sector banks usually acting at the behest of the central bank, started selling dollars.

Dealers said chances are that if FIIs start getting more aggressive on sales from their portfolios, the RBI could be meeting dollar demand directly to contain market volatility.The RBI does the same when they meet dollar demand for crude imports through reserves.

The rupee has been falling steadily in the past few weeks. The beginning of this fiscal saw the rupee ruling at around 46.60 levels. Since then the currency has fallen by one rupee and eighty three paise, and has recorded a depreciation of 3.88 per cent when it touched the intra-day low today at 48.43.

``The demand for the greenbacks seems to be genuine and not speculative. Towards the fag end of the trading session, State-run banks started selling dollars heavily, possibly on the behest of the RBI, which lent some support to the currency'', said a dea ler.

Forex dealers contend that while the global economic situation continues to be precarious, the Indian currency is likely to find support at the levels where the fall was seemingly stemmed at 48.43 today. ``The fact that it didn't break this level indicat es that it will possibly be capped at 48.50 in the near term. But its difficult to take a view in the current market scenario'', said a forex dealer with a private sector bank.