Date:30/05/2006 URL: http://www.thehindubusinessline.com/2006/05/30/stories/2006053002850600.htm

Back Rupee breaches 46 mark

Our Bureau

Mumbai, May 29

Sustained demand for dollars, particularly from oil companies, and large FII outflows pushed the rupee below 46 level against the greenback on Monday. The last time the rupee fell below the 46 level was in December 2005, said dealers. Opening lower at 45.95/97, the rupee ended at 46.09/10 against the previous close of 45.88/90, losing 20 paise on the first day of the week. Last week, the domestic currency was volatile as it mirrored the movements in the domestic equity market. The dwindling of FII supplies in the equity market also impacted the rupee. "The supply-demand mechanism has shifted in favour of demand," said Mr V. Rajagopal, Chief Dealer-forex, Kotak Mahindra Bank. Dealers say the next resistance level could be 46.30, last seen in December 2005 and prior to that in December 2004. If it breaks the 46.30 level, the rupee is likely to be weaker, dealers said. "We are looking at the rupee touching 46.35-46.50 levels within a week as the demand factor will continue. Oil prices are high and a possible hike in domestic petrol prices too could push the rupee further," he said. Another major fall in the stock market could weaken the rupee further, Mr Rajagopal said. The forward premia continued to be benign with the six-month premium closing at 06.3 per cent (0.70 per cent) and the one-year premium at 0.82 per cent (0.89 per cent).