Date:26/05/2006 URL: http://www.thehindubusinessline.com/2006/05/26/stories/2006052603050600.htm

Back Rupee slide continues

Our Bureau

Mumbai, May 25

The rupee continued its downward slide on Thursday, on fears of another fall in the equity market due to FII selling. Other Asian currencies losing against the US dollar also helped the downturn. The rupee opened at 45.90/92 and closed at 45.89/91 against the previous close of 45.75/76. This is the lowest level the Indian currency has touched in 2006.

"The rupee's decline is mainly due to negative sentiment in the stock market and commodities market. I see it crossing the 46 level in the next two to three days," said a dealer with a private bank. The dealer also said that RBI was seen selling dollars through state run banks, to stem the fall of the rupee. "I don't see the rupee gaining much for two to three more months, because people are terribly injured in the stock market," he said. The forward premia also came down drastically, with the six-month closing at 0.46 per cent (0.74 per cent) and the 12-month closing at 0.75 per cent (0.9 per cent). If the RBI does not supply dollars, the forwards may even trade at discount, the dealer said.