BUSINESS

Rupee falls to one-year low against dollar

Interbank foreign exchange market witnesses brisk trade with wide fluctuations

MUMBAI: Resuming its slide against the dollar, the rupee plunged to its more than one-year low of 41.76/77 as the heavy demand for the U.S. currency in view of high oil prices continued modest its short supply.

The interbank foreign exchange market witnessed brisk trade with wide fluctuations in the local currency in a range of 41.55 and 41.79 during the day.

The Indian currency lost 41 paise against the U.S. counterpart.

The rupee resumed sharply lower at 41.59/60 a dollar from its last close of 41.35/36 a dollar.

The rupee is hitting this level for the first time since April 20 2007, when it closed at 41.76/77 a dollar.

Meanwhile, the Reserve Bank of India Governor Dr Y. V. Reddy said the situation is reflective of the “global uncertainties”. The rupee’s weakness is contrary to the apex bank’s expectations of its strengthening.

The RBI has hiked cash reserve ratio to 8.25 per cent, though it is yet to come into effect fully, to tighten money supply.

A tighter money supply should have triggered the rupee to move in the opposite direction, a dealer with a private bank said.

Sky-high global oil prices prompted heavy dollar demand from oil refiners and other importers amid inadequate supplies of American currency and a slowdown in capital inflows into sluggish equity markets, dealers said. — PTI

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