The Hindu Business Line : Re touches new low on corporate demand

In spite of the country's forex reserves crossing the $50-billion mark, the rupee lost around ten paise on Friday to close at its lowest ever of 48.7650/7750 to a dollar.

Dealers said that a sudden spurt of dollar buying by corporates and banks had caused the rupee to slide.

Forex dealers said the forex reserves have already crossed the $50-billion mark last week.

The rupee opened at levels of 48.68 and fell to around 48.74 during the day when some dollar selling brought the rupee back to levels of 48.68/69. At these levels, there was buying interest and the rupee closed at around 48.77 levels.

According to some dealers, the strong dollar buying from foreign banks such as Standard Chartered and BNP Paribas could have been on account of demand from petrochemicals major Reliance of around $30-40 million for some "big payments.''

Dealers said that though inflows into the market have been good, the Indian currency fell mostly due to some banks and corporates covering to meet their month-end demand.

Said one dealer, "The pre-Budget sentiment has been good and FIIs have been buying in the stock markets on account of which inflows into the forex markets have been strong. The rupee will remain in the 48.60-70 band at least till the end of the month.''

Dealers believe that RBI has been allowing the rupee to find its own level, in order to boost to exports.

In fact, RBI has been mopping up excess dollars from the market to prevent the rupee from becoming stronger.

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