Nervousness grips forex market

MUMBAI, MARCH 13. The rupee tumbled down against the U.S. currency today on a fresh wave of heavy dollar short-covering by banks in volatile trade at the Interbank foreign exchange (Forex) market, partly reflecting the meltdown in share values at the country's bourses.

A whopping depreciation of nearly ten paise from overnight levels of 46.5550/5650, the rupee logged a closing quote of 46.65/66 a dollar after moving in a broad range of 46.5700 and 46.6600 in choppy two-way dealings. The rupee opened on a weak note at 46.5650/5750.

Nervousness gripped the forex spot trade at the very outset of business today in a direct reflection to the uncertainties prevailing at the stock markets, causing panic operators to scramble to cover dollar positions, dealers said.

``The rupee virtually slumped in early dealings to 46.64/66 after the initial crash at the Bombay Stock Exchange saw the index plunge by over 300 points, but the subsequent smart recovery at BSE reflected in a sharp rupee rally to 46.60/62,'' a forex dealer said.

A steep fall of 227 points at the BSE had its impact in the forex spot trading.

A section of the market expected the rupee depreciation to a correction with respect to the real effective exchange rate (REER) as nearly all Asian currencies have fallen in the last week.

Meanwhile, the Reserve Bank of India fixed the reference rate at Rs. 46.61 a dollar, as against Rs. 46.55 yesterday. - PTI

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