MUMBAI, DEC 1: The rupee crashed below the Rs 39-mark to hit an all-time low of Rs 39.30/30 against the US dollar on Monday even as the Reserve Bank of India kept away from the scene, leaving the foreign exchange market to speculators and nervous corporates.Opening the day at Rs 38.60/70, the Indian currency broke the Rs 39-barrier as soon as the State Bank of India entered the market to buy dollars on behalf of its public sector clients. As the RBI failed to intervene in the market, the rupee subsequently continued to lose ground steadily to close at a historic low of Rs 39.30/33, showing a record fall of almost 75 paise over the Friday's level. With this fall, the rupee has fallen around 9.16 per cent from its mid-August level.However, after the closing hours of the forex market, the RBI came out with fresh curbs to reduce rupee volatility, banning corporates from re-booking forward contracts cancelled for non-trade transactions. (Non-trade transactions primarily consists of external commercial borrowings and FCNR (B) loans which contribute about a third of India's outstanding debt of $ 92 billion).The RBI package, including postponement of cash reserve ratio reduction, announced on Friday to reduce liquidity (to stop speculators borrowing rupees to buy dollars, converting back to rupees at a cheaper rate and repaying them and making a profit) failed to make any impact on the market today.Dealers said political uncertainty, after Prime Minister I K Gujral resigned last week, has given ample scope for speculators to hammer down the rupee. ``The political instability and subsequent vacuum that is being created is playing a major role in the rupee depreciation,'' said V Ravikumar, chief dealer at ABN-Amro Bank.He said the rupee was likely to touch 40 even after if the RBI intervenes on Tuesday. ``Sentiments about the rupee are extremely bearish and the measures that are RBI has taken today will only add to this,'' Ravikumar said.However, despite continous fall of the Indian currency, the Finance Ministry kept a brave face. ``I'm not rattled by the the rupee fall,'' Finance Secretary Montek Singh Ahluwalia said in New Delhi, adding that it was not necessary for either the Finance Ministry or the RBI to issue a statement every time the rupee fluctuates in the forex markets.With bearish sentiments prevailing in the rupee, corporates who were waiting to cancel at the Rs 39 level will now wait for cancellation at Rs 40 or 41 levels. However, after that they will have to keep their exposures unhedged.``The latest RBI measure does not mean much except that it will curb a little speculation. But what do you do when dollar demand has started to come in for PSUs and there is not enough supply of dollars,'' said a dealer.Meanwhile, the RBI inspection into eight banks has revealed that a number of corporates, which have a long term repayment commitments and those which run exposures on account of foreign currency balances retained abroad, have been using the volatility in the market to speculate.``While it is recognised that corporates need to hedge their exposures, in the current scenario excessive speculation on currency movements needs to be curbed,'' an RBI statement said.According to N S Paramasivam, head treasury (forex) of Essar Group, the RBI measure announced today will curb some speculation, but there has to be a sea-change in sentiments for the rupee. ``One statement from the new RBI governor Bimal Jalan will definitely help,'' he said.
