The Hindu Business Line : Rupee ends lower, breaches 40

The rupee ended lower against the dollar on Wednesday as there was offshore-related buying and short covering by traders. While the domestic currency traded in a narrow range of two paise in the first half of trade, it broke the 40 level after 2 pm and closed about 10 paise lower. The rupee opened at 39.95/96 and touched a low of 40.08, before closing at 40.05/06, against the previous close of 39.95/96. The market is anticipating that the US Federal Reserve may not cut key interest rates as inflation is a concern in US too. So, the expectation is that the US dollar may strengthen, said a dealer with a public sector bank. The forward premia came down by about 10 paise, on the general belief that interest rate differential may not increase, with the RBI likely to cut rates and the US Fed unlikely to cut rates, the dealer said. The six-month premia closed at 2.33 per cent (2.86 per cent) and the 12-month at 1.99 per cent (2.26 per cent). -- Our Bureau

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