The Hindu Business Line : Rupee breaches 44

The rupee depreciated by around 25 paise against the greenback on heavy dollar demand from foreign banks and importers. The domestic currency breached the psychological 44 level and opened weak at 44.08/10. It dropped to 44.24/25 during the day but finally ended at 44.18/19, against the previous close at 43.93/94. Dealers said that the rupee opened weak tracking the overseas strength of the dollar against all major currencies.

“Foreign banks bought dollars to take advantage of the arbitrage opportunity in the non-deliverable forward market. Oil companies and other importers also bought dollars,” said a dealer at a private bank. Nationalised banks were seen selling dollars, possibly on behalf of RBI, when the rupee touched intra-day low of 44.24/25, dealers said.

Exporters reacted to the rupee’s depreciation by selling forward dollars, which led to a fall in premium. The 6-month forward dollar ended at 2.84 per cent (3.36) and the 12 month closed at 2.58 per cent (2.86).

— Our Bureau

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