Rupee hits historic low at 44.07/$

By Our Special Correspondent

MUMBAI, MAY 10. The Indian currency closed at an all time low against the U.S. dollar at Rs. 44.04/07 today following heavy demand for the U.S. currency at the inter-bank foreign exchange market here.

As a continuation of Tuesday's fall, the Indian currency started tumbling from the morning when the market opened and continued to fall till the close. Even though the market expected an intervention from the Reserve Bank of India, it was conspicuous by its absence.

On Tuesday, the rupee closed at a new low of 43.6775/43.6825, presumably on pressure for remittance for oil imports. This pressure spilled over to Wednesday as the morning deals saw the rupee opening at the previous close. As sentiment remained weak, panic set in when State Bank of India was spotted bidding dollars.

Within a few minutes, the rupee slipped below the psychologically important level of 43.71, the previous all time low touched in August 1998.

Once the 43.71 point was breached, it went to around 43.77 level. However, the market got a breather when SBI sold dollars at Rs. 43.75 and also on rumours that the RBI would come out with a statement on the foreign exchange market. However, no statement from the RBI came and the State-run bank again started buying dollars. At this time some foreign banks and many corporates were seen joining to push the rupee further down. With no hints of intervention from the central bank the rupee soon crossed the 43.90 level and swiftly breached the 44 mark to touch an intra- day low of 44.07, also the lowest ever recorded intra-day low against the dollar. It however recovered briefly to 43.96 before closing at 44.04/07.

Meanwhile, the RBI fixed the reference rate of the rupee against the dollar at Rs. 43.74.

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