The Hindu Business Line : Rupee sheds 38 paise to $

IN tandem with the tailspin in the equity markets on Friday, the domestic currency lost 38 paise in its value against the greenback, closing at 45.60/63 as compared to its previous close at 45.23/25 on Thursday.

Currency experts ascribed the rupee's weakness to foreign insitutuional investors (FIIs) pulling out of Indian equities, which led to a sharp dip of 330 points in the BSE sensex and a fall of 135.1 point in the S&P CNX Nifty, the sharpest fall on the National Stock Exchange since inception.

The forex market was characterised by custodial buying of dollars by foreign banks, possibly on behalf of foreign clients even as state-run banks were selling.

The rupee opened at 45.23/26 against the dollar. In the afternoon, it touched an intra-day low of 45.66. Some dealers alleged that a stray deal was struck even at 45.70 levels. Apprehensions over the political change of guard at the Centre are also rife in the market.

Statements from political parties about the possibility of holding back disinvestment of profitable PSUs added to the already weak sentiment in the market, said a dealer.

As of now, the market seems to be lost for direction and the dealers have slipped into the wait-and-watch mode. Dealers said that the rupee would remain weak in the days to come and importers would continue to run for cover. Some of them believe that the market may witness corrective action on Monday.

Meanwhile, forwards moved erratically, with the six-month forward ending at - 1.25 per cent (-1.30 per cent) and the one-year at - 0.56 per cent (- 0.06 per cent).