The Hindu Business Line : Rupee touches one-year low

DRYING up of dollar supplies in the domestic forex market along with strengthening of the greenback overseas dragged the rupee down to close at its lowest levels in one year on Friday.

The domestic currency ended at 46.32/34 against the dollar - a level last witnessed on July 16, 2003 - said dealers.

"The absence of foreign inflows is largely attributed to political uncertainty and worries over the stability of the reform agenda of the Government. The oil prices ruling high at about $42 per barrel put additional pressure on the domestic currency," said a senior dealer with a private bank.

The rupee opened at 46.28, marginally lower than Thursday's close, and slid down on underlying buying pressure on dollars, said dealers.

State-run banks began selling heavily when the rupee touched the day's high at 46.33 against the greenback, perhaps on the behalf of the central bank, they said. Foreign banks also moved in to sell later, and together the banks succeeded in bringing the rupee up to 46.16, they added.

Heavy buying of dollars on behalf of large oil corporates and other importers in the absence of adequate dollar supply was a major cause of pressure on the domestic currency, dealers said.