Rupee declines sharply against US Dollar
Fears of a slowdown in FII inflows amid concerns of rising US interest rates weighed on Rupee value, dealers said.india Updated: May 18, 2006 21:46 IST
The Rupee on Thursday declined by 27 paise to close at Rs 45.45/47 per dollar, succumbing to a fresh round of heavy dollar demand on the back of a resurgent dollar overseas and partly weighed down by a fresh meltdown in the bourses following the slide in Asian markets.
After the overnight smart 32 paise rally, nervousness once again gripped the interbank foreign exchange (forex) market from the onset of business with the Rupee resuming distinctly weak at Rs 45.40/42 per dollar and initially tumbled to Rs 45.55/57 per dollar.
Suspected dollar-buying intervention by state-run banks salvaged the Rupee to Rs 45.35/37 but renewed dollar demand drove it down to session lows of Rs 45.65/67, tracking the plunge in the stock markets, wherein the BSE Sensex slumped by a huge 826.38 points on a virtual sell-off.
Rupee eventually settled at Rs 45.45/47 per dollar, steeply lower from Wednesday's close of Rs 45.19/20.
Despite suspected dollar-buying intervention by the central bank, the Rupee came under renewed severe pressure after a global strong dollar fuelled hectic dollar buying from all quarters.
Fears of a slowdown in FII inflows amid concerns of rising US interest rates weighed on Rupee value, dealers said.
The downturn in global metal and equity markets that triggered the slide in the local stock markets further aggravated rupee woes, they added.
Foreign Institutional Investors (FIIs) pulled out a massive $375 million from equity markets in the first three days of the week.