Concerns about the weak euro and demand for dollars from panic-stricken domestic importers saw the rupee falling to levels seen more than two years ago.

On Friday, the rupee crossed the psychologically important 50 mark to the dollar. Structural issues like the gap between India's imports and exports and uncertainty over capital inflows could put more pressure on the rupee in the coming days, said dealers.

The rupee opened at 50.05. It touched a low of 50.32 and a high of 49.96 in intra-day trade. It ended the day at 50.03, against the previous close of 49.80/81. The rupee had last crossed the 50 level in May 2009.

According to a public sector bank dealer, the decline in the rupee was triggered by the weak euro. It was also accentuated by the fall in the Sensex.

“Nobody is comfortable with the rupee crossing the 50 level, especially importers. There was dollar demand to take advantage of the arbitrage between the dollar value in the overseas non-deliverable forward market and the domestic market,'' the dealer said.

European leaders are scheduled to meet on Sunday to work out a solution for the debt crisis. If they take a decision to pump in more euros, it would push up liquidity. As a consequence commodity prices would rise. This will further put pressure on the rupee, said dealers.

According to Mr Moses Harding, Head, Global Markets, IndusInd Bank, panic set in the forex market after the rupee crossed 49.50, which led to its sharp decline.

“Exporters are over covered and are not willing to sell dollars as forward premia are low. On the other hand importers are unhedged and therefore, want to buy more dollars,'' he said.

In the forward premia market the one-year premium closed at 2.95 per cent (2.96 per cent).

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