Tighter ECB Norms Pull Rupee Down To Months Low Of 45.40

Mumbai, Nov 13: | Updated: Nov 14 2003, 05:30am hrs
The rupee slipped against the dollar on lingering fears of a cash dollar shortage aggravated by the Centres decision to curb foreign currency loans to end at a one-month low and the lowest closing level since October 15.

Opening the day at Rs 45.36/38, the rupee slid to Rs 45.39/40 in late morning deals, sharply lower from the overnight finish of Rs 45.3450/3550.

The rupees current fall beats the global trend of a rise in currencies against the dollar. This is the result of the redemption of the Resurgent India Bonds and maturing of forward contracts rolled over last month, which has resulted in a cash-dollar shortage. The rupee has declined by nearly 13 paise in the week so far.

In the forward segment, premiums edged up on renewed paying pressure though forward dollar up to January 2003, continued to trade with a discount between 0.5/3 paise. The sixth-month annualised premium ended at 0.25 per cent, up from its overnight 0.05 per cent.

Meanwhile, call rates finished sharply lower at 2.50-3 per cent on the back of ample liquidity ahead of reporting Friday after opening at around 4.40-4.50 per cent. Most players had covered for their reserve needs, resulting in limited demand and low key activity. It was pointed out that sterilisation of forex inflows by Reserve Bank of India (RBI) is infusing liquidity. Foreign funds have invested a total of $5.9 billion in local shares and bonds in 2003 till last week. Forex reserves rose to $92.59 billion in the week ended October 31, from $91.89 billion in the previous week.

Government security prices too succumbed on selling pressure after attempting a rally and prices fell by 15-40 paise across the board. At the longer end, the fall was more pronounced. The yield on the benchmark 10-year paper edged up to 5.09 per cent from its overnight 5.08 per cent with the 7.27 per cent 2013 ending at Rs 116.60/65, down from Rs 116.75/80.