The Hindu Business Line : Rupee breaches 45 level

The rupee fell by more than 30 paise against the greenback on the back of dollar buying by oil companies as well as the Reserve Bank of India (RBI). The domestic currency opened at 44.80 and touched an intra-day low of 45.25/26. It closed the day at 45.19, down from 44.8350/8450 on Monday. This level was previously seen on December 29, 2005. Dealers said that there was hectic dollar buying by State Bank of India (SBI) on behalf of oil companies. "Importers were buying dollars prompted by the surge in the price of global crude to $70 a barrel. The SBI strike last week might have caused a lot of bunched-up buying this week," said a dealer at a private bank. Dealers also said that dollar buying by the RBI despite a stronger liquidity and a depreciating rupee was mainly for replenishing the forex reserves. "The RBI seems to be preparing for capital account convertibility and hence is trying to build forex reserves," one dealer said. The fall of 306 points an the Bombay Stock Exchange also caused the rupee to breach the psychological 45 level. "Once the 45 level was breached, the banks were covering for their short positions. Some dollar selling by nationalised banks at 45.25/26 caused the rupee to close lower," said a dealer. In the forward premia market, the six month closed at 1.17 (1.25) and the 12 month ended at 1.25 per cent (1.34).