Financial Daily from THE HINDU group of publications
Wednesday, May 12, 2004
Money & Banking - Forex
Rupee sheds 45 paise intra-day on corporate demand for dollar
Mumbai , May 11
WITH the TDP-BJP alliance being routed in the Andhra Pradesh, corporates turned wary and rushed into purchasing dollars making the rupee lose as much as 45 paise intra-day against the greenback.
The rupee, however, recovered a tad to end the day at 45.39/41, down 34 paise from the previous close.
In just two days, the currency has lost as much as 72 paise and 1.3 per cent since the start of this month.
The rupee today opened at 45.05/15 and fell drastically on thin volumes to its intra-day low.
At the intra-day low, PSU banks, perhaps at the behest of the Reserve Bank of India, sold dollars to rescue the domestic currency.
However, with heavy corporate demand at 45.10/12 levels the currency weakened further.
``TDP was expected to take a beating but not as severe as this. Market is taking the TDP-BJP's fall as a cue to the Lok Sabha election results,'' said the head dealer of a private bank.
The expectation is that volatility in the market will continue till a firm Government is formed at the Centre.
A large software company sold over $100 million today. Even this supply did not help ease the demand for the greenback.
Though exporters are excited over the sudden gain in their earnings, they find the markets too rocky.
Said Mr Shreyas K. Doshi, MD, Shrenuj & Co Ltd, which exports diamonds and jewellery worth Rs 400 crore annually, ``The dip in the rupee is certainly good for the exporters. But there should be stability in the value of the rupee because otherwise players are confused as to which level they should fix their prices for their export transaction.''
In the forward market, the discount has deepened further.
The six-month forward closed at - 0.86 per cent (-0.57 per cent) and the one-year forward ended at - 0.39 per cent (-0.24 per cent).
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