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Updated: October 21, 2011 22:58 IST

Rupee plunges to 50-mark

Special Correspondent
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Strong dollar demand, capital outflows impact

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.

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We ourselves are responsible for all problems as we are not using free infinite solar energy during sunny hours and instead are using costly imported energy of say Rs 1000 crore a day like lpg, kerosene, electricity for cooking, water heating and day lighting , heating, steam making, not dehydrating food to loss them etc which can be replaced by free solar. We are not making our buildings free of cost by planting roof by lime and are using costly energy worth 2 lac crore rupees a year to cool buildings. We are not doing anything to harvest rain water for domestic, commercial and irrigation and are wasting Rs 2 lac crore a year govt water subsidy and supply funds spent on supplying water to us. Though our oil import bill is threatening to reach Rs 7.5 lac crore next fiscal but we never think that how petro products can be saved and are not looking towards free electric transports media in are guzzling motor fuels. We cry about food and fuel inflation and India has got Rs 1.25 lac crore food security bill a year but are not planting 10 vegetable twines percapita on our roofs and nearby self owned open spaces to double veg production and 100 to double food production. We spend unimaginable amount of money to fight illness but never adopt simple free of cost preventive measures and do everything to get lifestyle, infectious and mental diseases. I have done nothing except irregularly using a 4 pot box type solar cookers and writing comments which inspire no one. Each and every one of us is responsible for problems mother India is facing. If we all do constructive works rather than blaming others all problems can solve in fraction of a second. Policy makers teach us lessens by carrot and stick method.

from:  alok
Posted on: Oct 22, 2011 at 19:11 IST
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