The rupee on Friday closed below the psychological 50-mark for the first time in the last two-and-a-half years against the U.S. currency on sustained strong dollar demand and signs of fresh capital outflows.
At the interbank foreign exchange market, the rupee plunged to 50.32 intra-day tracking sluggish stock markets.
Spot rupee opened at 50.01. It traded at a low of 50.32 and a high of 49.96 before closing at 50.02 on the last trading day of the week, prior to the festive season.
The dollar-rupee October month contracts started trading at 50.1050. It traded at a high of 50.3850 and recorded a low of 50.0300. It concluded the trading session at 50.0825.
Compared to Thursday's trading, the rupee moved down sharply against the U.S. dollar. It opened at 49.42 on Thursday and traded at a low 49.81 and a high of 49.3650. The dollar-rupee October month contracts started trading at 49.4825 and recorded a low of 49.8950 and a high of 49.44 before closing at 49.88.
This wide gap between the last two days' trading surprised the market. The uncertainty in resolving the European debt crisis is one of the issues which the markets consider as a major worry.
Market participants were testing the lowest levels of rupee at 50.32 a dollar as they expected that the central bank would intervene, through state-owned banks. However, the rupee recovered and closed at 50.02.
Some market participants point out that there was a rush for dollar to import gold as Deepavali is approaching. “The rush for gold is a seasonal trend,” said a trader. Further pressure on rupee is inevitable as current account deficit and high inflation persist.
PTI reports:
Meanwhile in New Delhi, Reserve Bank Governor D. Subbarao met Finance Minister Pranab Mukherjee and discussed ways to deal with spiraling prices aggravated by a weak rupee. Even as the rupee plunged to 30-month lows, dealers said there were no signs of RBI intervention in the market.
The rupee moved in a range of 50.32-49.95 before settling at 50.01/02. On Thursday, it had tumbled by 65 paise.
The dollar index was down by 0.15 per cent against a basket of currencies ahead of the outcome of any move from European leaders to solve the eurozone debt problems in the weekend summit. The New York crude oil was trading above $86 a barrel in European market.
The Reserve Bank of India fixed the reference rate for the dollar at Rs.50.0670 and for the euro at Rs.69.0350.
