Rupee tumbles to new low

By Our Special Correspondent

MUMBAI, JULY 2. The rupee tumbled to a historic low of 47.17 to a dollar before recording a new closing quote of 47.15 in the inter-bank foreign exchange market here today.

``The rupee plunged to a historic low of 47.16/17 against the dollar in late inter-bank trading, possibly on speculation that the central bank might be realigning the nominal exchange rate of the rupee closer to its real effective exchange rate (REER),'' said Mr. N. Subramanian, eMecklai, a leading foreign exchange dealing firm. ``Since the domestic currency is overvalued by over 3 per cent in trade weighted terms the currency has much more scope to fall in the near term, also initiated dollar buying by banks,'' he added.

The rupee opened slightly weaker at 47.05/06 against last Friday's close of 47.04/05 and during early trading declined to 47.0575/0675 on light dollar demand. It made a marginal recovery to 47.05 on dollar sales by exporters but weakened again when dollar demand resurfaced. A major State-run bank was persistently buying dollars reportedly for a State electronics firm, dealers said. Later the rupee closed on a weak tone at 47.145/155.

Forward premiums initially were lower on fresh receiving interest but later tightened on renewed paying interest, ``possibly prompted by weaker spot.''

The benchmark six month premium slid to 4.69 per cent during mid- session after opening at 4.73 per cent but climbed higher during the closing hour on huge paying interest as spot weakened. It closed at 4.74 per cent, slightly below Friday's close of 4.76 per cent.

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Section  : Business
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