Mumbai, Aug 18: The rupee hit a new low of 43.38 on Tuesday on the back of good corporate demand for the greenback in a thin market and closed at 43.36/37 registering the lowest ever closing. With this, the currency has lost about 50 paise over the last one week. The rupee had closed at 42.88 last Tuesday.All eyes are now the Reserve bank of India as the rupee is expected to test a new low on Wednesday and dealers see it between 43.39 and 43.47 against the greenback. On Tuesday, the central bank did not intervened in the forex market. The State Bank sold spot dollars.
The rupee's fall on Tuesday was triggered by the finance minister Yashwant Sinha's statements late on Monday in Bangalore that domestic bourses and currency markets would be affected by international developments.
Regional markets extended losses on Tuesday after a Russian ratings downgrade and its decision to lower the rouble's trading band on Monday.
Dealers said market players were also worried about the impact of floods on the Chinese economy and its currency.
Forward premiums quoted firmer across all maturities today tracking a weaker spot rupee with the six-month annualised forward cover finishing at 9.01 per cent, up from Tuesday's 8.46 per cent. Import hedging, especially in far-forwards, was driving forward dollar premiums higher, dealers said.
According to Mecklai Financial Services senior vice president, KN Dey: "Bearish sentiment on the rupee is expected to continue...the rupee will test a fresh low later this week".
Opening the day at 43.23/25 from its overnight close at 43.16/17, good corporate demand for the greenback saw the local currency quoted at 43.34/35 levels soon thereafter. State Bank of India's sold dollars at these levels, helping the rupee recover to 43.30.
"Dollars inflows are poor...sentiment on the rupee is poor with the worsening political situation and a Rouble crisis," a dealer in a brokerage said.
At close, the rupee quoted at 43.36/37, which was also its lowest ever finish.
In the forwards, near terms were up by 4-5 paise, but premiums beyond six months closed 10-15 higher from their overnight finishes. January premiums finished 175/178 paise, February at 207/210 paise, March at 245/250 paise and April at 282/285 paise.
"There was quite a bit of paying in the longer maturities. A few corporates were also seen receiving and paying later...but exporters are holding back", dealers said.
Call rates ended at 7.25-7.75 per cent today, lower from its previous close of 8.00-9.00 per cent, but forwards were up in line with a weaker spot rupee. Premiums are seen going higher later in the week with a tightening in call rates. "Outflows from the call market on account of a five-day repos on the 19 of this month and Reserve bank open market operations will push premiums up", dealers said.
Printer-friendly page
