The Hindu Business Line : Rupee touches 3-year low

The rupee touched a three-year low of 46.75 on Monday, as oil prices continued to rule high due to the political crisis in the West Asian region. This led to a strong dollar demand and the greenback strengthened against all major currencies.

The rupee opened weak at 46.46/48 and touched an intra-day low of 46.78, before ending at 46.75, 37 paise lower than the earlier close of 46.38. "Overall, the dollar strengthened against major global currencies on the back of political turmoil in West Asia, which pushed up oil prices," said Mr Ashit Parekh, Head-Forex, IndusInd Bank.

Crude prices reached $77-78 per oil barrel and are expected to touch $80 if the Israel-Palestine political conflict continues, he added. "Market participants probably felt that the dollar is a safer currency to park their money," said Mr Paresh Nayar, Senior Vice-President-Forex, Development Credit Bank.

"The overall market sentiment seems to indicate that there could be a further hike in crude prices," said Mr V. Rajagopal, Chief Dealer, Kotak Mahindra Bank. The fall in domestic stock market also weakened the Indian currency.

The outlook for the rupee is weak. It may even touch 47 in the coming days, said Mr Rajagopal. In the forward premia market, the 12-month closed at 1.16 per cent (1.13) and the six-month ended at 0.96 per cent (.98).