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MUMBAI: After breaching the psychological level of 45 on Monday, the rupee continued to plunge downwards on Tuesday. It touched an 11-month low against the US dollar to close at 45.16/17, almost 30 paise lower than Monday's close of 44.87/88.

The rupee had opened lower at 44.94/96 and touched an intra-day low of 45.22/23. This level was last seen in November 2004, said dealers.

The rupee crossing the 45 level was expected, said market experts. But there was no panic buying and there was genuine overall demand for the greenback. Dollar selling by exporters was also seen once the rupee crossed the 45 level, said dealers.

The Reserve Bank of India did come in to check the dollar, but the impact was marginal, dealers said.

Mr V. Rajagopal, chief dealer, forex, Kotak Mahindra Bank said, "The short term sentiment for the rupee looks bearish. It is hard to say whether the rupee weakness is feeding the stock weakness or the other way round. Both are linked."

Traders said the rupee may touch levels of 45.30-45.35 in a couple of days. A dealer with a public sector bank said the rupee is likely to remain at these levels until fresh FII inflow comes in.

The forward premia market also came down with the 6-month premium closing at 1.43 per cent (0.5 per cent) and the 12-month also closing at 1.43 per cent (0.52 per cent).

The effect of the depreciating rupee was also reflected in bond prices, which closed about 20-25 paise lower. The bond market was choppy, saw low volumes and little buying support, said dealers.

Bond prices opened about 2 paise weaker and continued to fall throughout the day, as the rupee weakened. The 7.37 per cent 9 year-2014 paper opened at Rs 102.20 (7.02 per cent YTM) and closed at Rs 102.05 (7.04 per cent YTM) against Monday's level of Rs 102.22 (7.02 per cent YTM). The 10.25 -16 year-2021 paper opened at Rs 125.20 (7.48 per cent YTM) and ended at Rs 125.08 (7.50 per cent YTM), lower than the earlier close of Rs 125.39 (7.47 per cent YTM).

Call rates opened at 5 per cent and closed at 5-5.05 per cent. Liquidity improved slightly, as RBI received and accepted 31 bids amounting to Rs 19,000 crore, in the one-day reverse repo auction. In the CBLO market, there were 235 trades for Rs 12,673.05 crore in the rate range of 4.96-5.10 per cent.

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Rupee sheds 30 p; bonds listless

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