The panic was not restricted to stock markets alone. The rupee plummeted to a 3-1/2-month closing low of 45.40/42 per dollar as the ongoing political uncertainties and a resurgent dollar overseas generated hectic demand for the US currency and took a further heavy toll of the rupee value. On the back of the overnight massive 39 paise decline, the rupee lost a whopping 36 paise, as nervousness continued to take a vice-like grip of the interbank foreign exchange (forex) market over concerns of the outcome of the Lok Sabha polls, dealers said. News of the rout of BJP-TDP combine in Andhra Pradesh assembly elections further aggravated rupee woes, they added. At one stage the rupee fall even amounted to nearly a rupee (for Monday and Tuesday) against the dollar. “Apart from political woes, the rise in the dollar value abroad also put pressure on the rupee. If the dollar rises abroad, foreign funds will pull out money from emerging markets and invest in the US,” said a dealer. In hyper volatile trade, the rupee opened with a wide downside gap at 45.10/15 per dollar from Monday’s over six-week closing low of 45.04/06 and tumbled to a low of 45.50/52 on frenzied dollar demand amidst an acute cash dollar shortage in the system.It bounced back to 45.18/21 on fresh exporter dollar sales and unwinding of long dollar positions by large state-run banks, but later again succumbed to heavy dollar bids to close at 45.40/42, a steep 36 paise decline from overnight close in levels, dealers said.
