The rupee opened at 45.03/05, almost unchanged from Monday's closing levels. "There was an all-round demand from corporates, coupled with short-covering by banks. Trading remained volatile, as demand far exceeded supply.

Intermittent selling by exporters could not lift sentiments," dealers said.The Reserve Bank of India (RBI) governor Bimal Jalan told reporters in New Delhi: ""There is no reason to panic." He added that the situation would stabilise soon.

In the interbank forex market, there was sustained dollar demand from corporates and foreign funds throughout the trading session. "Foreign banks were buying on behalf of Foreign Institutional Investors (FIIs)," a dealer with a forex brokerage said. Foreign funds sold a net $324.7 million worth of equities in July. "The currency fell on heavy dollar buying by state-run and foreign banks," a dealer said. Banks were buying dollars for their corporate clients for meeting interest payments on external commercial borrowings (ECBs) and oil payments.

In the forward segment, premiums ended lower amid good liquidity in the money markets. The premiums ended lower on receiving interest from state- run banks, dealers said. The sixth month premia ended at 4.17% (4.37%), with one year premium closing at 4.19% (4.32%).

The State Bank of India (SBI) reportedly did not resort to any significant dollar-selling to support the rupee on behalf of the RBI. Forex dealers expect the RBI to intervene in case the rupee falls further beyond the 45.25/26 level.

"In case there is no intervention from RBI through the state-run banks, the rupee may touch 45.30 levels on Wednesday," Centurion Bank country treasurer J Moses Harding said.

Dealers expect to depreciate further, if the oil import bills mount further.

Nothing to panic: Jalan
New Delhi, Aug 1: RBI Governor Bimal Jalan on Tuesday asserted there was no reason to panic about the sharp fall in rupee value to 45.16 against dollar and said the situation would "stablise" soon.

"There is no reason to panic. Absolutely no," he told reporters adding there would be no "surprise" announcements in the immediate future in this regard. Jalan also held a 90-minute meeting with finance minister Yashwant Sinha which was also attended by economic affairs secretary EAS Sarma and chief economic adviser Shankar Acharya.

Both Sinha and Jalan described the meeting as "routine."Jalan also wondered why only the fall in rupee value against dollar was being focussed and not the Indian currency's appreciation against euro and pound sterling.

Only last week the RBI had resorted to money-tightening measures by increasing cash reserve ratio and Bank rate to stablise the value of rupee, which had inched toward Rs 45 mark.