Date:16/05/2006 URL: http://www.thehindubusinessline.com/2006/05/16/stories/2006051605440100.htm

Back Rupee slips to 5-month low

Our Bureau

Mumbai , May 15

The Indian rupee slipped to a five-month low on Monday tracking the crash in stock prices and declining trend in currencies elsewhere.

The rupee opened at 45.05 against the US dollar. Heavy dollar buying by foreign banks kept the rupee down, dealers said. It ended at 45.55 compared to the previous close of 45.0405.

The rupee had touched a low of 45.43 on December 20, 2005, a dealer said.

According to the market, the central bank's attempt at selling dollars did not help arrest the home currency's downturn.

Monday's plunge in stock prices was triggered by fears that foreign funds may exit emerging markets. The inflow of foreign money into Indian bourses was one of the factors that had helped the rupee stay firm against the US dollar.

The forward premium for one year opened at 1.02 per cent and ended at 1.05 per cent.

Bond yields moved up in anticipation of a possible hike in fuel prices as well as concerns on inflation.

Yields on the benchmark 10-year paper rose by 0.05 per cent to 7.60 per cent. Dealers said yields also moved up on expectations that the Reserve Bank of India may resort to a hike in reverse repo rate some time in June.

Additionally, the rise in US yields at the weekend also contributed to domestic bond prices moving down.