RBI prevents rupee from crashing below 47

According to forex dealers, the market witnessed heavy all-round dollar demand from foreign and nationalised banks till afternoon, pushing down the rupee to an all-time low. However, heavy dollar sales by state-run banks at the fag-end, apparently at the behest of the RBI, helped the unit to close stronger. "Had the RBI not intervened and pulled up the rupee value, the currency would have crashed below the 47 mark," said a dealer.

The rupee had plunged to historic lows of 46.78/80 in early intra deals on October 27, driven largely by fears of rising crude oil prices and a slow down in forex inflows. Banks went long on the dollar in early trade, apprehending demand for dollars from corporates and importers during the course of the day, dealers said.

Meanwhile, Finance Minister Yashwant Sinha today sought to allay fears about the downslide of rupee value saying it is "no cause for concern as economic fundamentals are strong." "The Balance of Payment (BoP) is no cause for worry," he said, adding looking at only the fluctuations of rupee value to US dollar tantamount to taking a "myopic view" of the whole issue. Sinha told reporters that the rupee fluctuations should be seen in its entirety. Though it has depreciated against the dollar, it has appreciated as compared to the euro.