Rupee under pressure

MUMBAI, SEPT. 17. The rupee ended at yet another all time low against the U.S. currency today at 47.85/90 a dollar, extending a seven-session string of record declines, even as the Reserve Bank of India intervened and propped it up from historic low of 48.44/48.

A continuation of the acute nervousness that has gripped the inter-bank foreign exchange market, post-U.S. crisis, the rupee surpassed the earlier all time low close of 47.82/84 logged last Friday, but a sharp recovery from intra-day low of 48.44/48, baled out by State-run banks' dollar sales at the behest of the RBI, dealers said.

``State Bank of India offered dollars in late afternoon deals after the rupee broke through the 48.40 a dollar barrier, followed by other State-owned banks, leading to a chain reaction wherein other banks unwound long overbought dollar positions," a dealer said. ``The rupee rallied to 47.79/81, hovered around 47.84/88 and later settled at 47.85/90 at close," he added.

Earlier, the rupee breached the 48 a dollar barrier and slumped to new low, pulled down by sustained heavy dollar demand from all quarters in the face of acute shortage of supplies, even as global political situation became more fluid.Dealers expect the rupee to stabilise at the current level, now that the market is aware of the RBI's resolve to support the rupee and prevent any further excessive speculation.

Exporters should now come in with their receivables, as the RBI has shown its determination to defend the rupee and bridge any demand-supply mismatches.

The rupee has depreciated by over 50 paise in the last eight sessions after foreign funds exited the market and hectic corporate dollar demand took a heavy toll of the rupee value. Disruption of dollar supply following the non-functioning of the U.S. financial markets after the terrorist attacks has also weighed down on the rupee.

The RBI fixed the reference rate at Rs. 48.18 a dollar against Rs. 47.70.

In cross currency deals, the rupee crashed against the Euro reflecting the single European unit's spurt against the dollar in overseas deals and also weakened against the British pound sterling.

- PTI

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