Rupee tumbles below 50

The rupee fell 52 paise to its all-time closing low of 50.46/47 as dollar demand from importers and an arbitrage play with offshore derivatives weighed....

Written by ENS Economic Bureau | Mumbai | Published:February 27, 2009 1:46 am

The rupee fell 52 paise to its all-time closing low of 50.46/47 as dollar demand from importers and an arbitrage play with offshore derivatives weighed,and bankers said negative news on exports could see it fall further. The Indian currency tumbled by 85 paise or 1.71 per cent in a four-day falling streak.

Prior to this,the rupee ended at 50.28/29 on December 1,2008,while it touched an intra-day all-time low of 50.60 the next day. Bankers said the Standard & Poor’s move to lower India’s rating outlook to negative will impact the rupee sentiment in the short-term as there are uncertainties on the borrowings front. “Good dollar buying by foreign banks to sell in offshore non-deliverable forward contracts to collect the immediate risk-free profits and a firm dollar overseas also put pressure on the rupee,” said a banking source. Month-end dollar buying by oil refiners and importers also put pressure on the rupee. Sustained capital outflows from the markets added to this bearishness. Foreign institutional investors (FIIs) pulled out nearly $ 1.6 billion in the current calendar so far.

The rupee could head towards its record low on Friday after a senior official from the trade ministry said exports were expected to have fallen an annual 16 per cent in January,a fourth straight monthly fall.

Meanwhile,stock markets rose further on Thursday,climbing for a second day,as an early rise in Europe helped lift morale in late trade but volume was light and the outlook uncertain. The 30-share BSE Sensex firmed 0.59 per cent,or 52.30 points,to 8,954.86,its highest close in a week. The benchmark index fell 1.3 per cent at one stage,led down by banks,before bouncing back. The 50-share NSE Nifty index rose 0.84 per cent to 2,785.65 points. Reliance Industries and software bellwether Infosys Technologies led the rise after economic worries had kept the market in the negative zone for much of the session. Ranbaxy Laboratories tumbled 18 per cent,the biggest fall among index components.

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