Rupee now gets close to 48 level

The rupee slid to its lowest in more than 5-years on Monday as stock market dived nearly 6 per cent, triggering fears of an accelerated outflow of foreign funds, while dollar demand from importers and oil firms weighed.

Inching down closer to the 48 level, the rupee ended at 47.80/81 per dollar, 1.5 per cent weaker than its 47.0750/0850 at close on Friday. It slumped to 47.85 during the session, its lowest since Feb. 14, 2003. The rupee has lost 17.6 per cent so far this year. “The dollar is stronger overseas. Importers and oil firms were buying dollars and there are no dollar inflows,” said a currency trader. “If this trend continues then we may see the rupee touch 49 against the dollar in the near-term,” he added.

Oil fell below $90 a barrel to its lowest in eight months, pressured by expectations that the global credit crisis would bring a sharp fall in oil demand. Oil is India’s biggest import and lower oil prices prompted refiners to make purchases at current levels, pushing up dollar demand and pressuring the local unit lower. The RBI sold dollars through state-run banks at various levels to prop up the rupee, but the demand for dollars was too large.