Rupee slips below 44 again

MUMBAI, MAY 23: The Indian rupee slipped past the crucial 44.0 level and ended weaker on Tuesday on steady demand for dollars from corpora...

MUMBAI, MAY 23: The Indian rupee slipped past the crucial 44.0 level and ended weaker on Tuesday on steady demand for dollars from corporates and foreign funds. The rupee ended at 44.025/035 per dollar against Monday’s 43.9725/9775, but off the day’s low of 44.05 per dollar. The rupee was steady around its previous closing levels in morning trade, but weakened in afternoon deals on corporate demand for dollars.

The rupee’s is within striking distance of its lowest close of 44.05/07 per dollar hit on May 10. Corporate demand for dollars has been steadily rising in the past two weeks after the rupee fell to an all-time low of 44.08 per dollar two weeks ago.

Dealers said the country’s largest commercial bank, the State Bank of India which sold dollars at 43.975 levels in the morning, withdrew its offer in afternoon deals. SBI is viewed by local dealers as a central bank surrogate and has protected the rupee from sliding past 44 levels in the past two weeks.

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There was scattered dollar demand from foreign funds repatriating dollars, dealers said. Data released by the stock market regulator the Securities and Exchange Board of India (SEBI) on Monday showed that foreign funds were net sellers of Indian equities in May after being heavy buyers in the preceding four months.

They have been net sellers worth $ 81.7 million until May 19 after being buyers of $1.6 billion in the January-April period. Forward premiums rose on the back of a weaker spot rupee and amid concerns the government was likely to announce a fresh bond auction.

Dealers said India’s rising inflation rate had also added to some paying pressure. Government data released at the weekend showed the year-on-year inflation rate, measured by the wholesale price index (WPI), at 6.31 per cent for the week ended May 6, up from 5.94 per cent the previous week and at its highest since December 19, 1998.

The six-month premium ended at an annualised 2.41 percent against 2.37 per cent on Friday.