Thursday, January 17, 2008

Rupee Weakens Against US Dollar

The rupee weakened against the US currency and ended at 39.29/30, cheaper by three paisa from the close of 39.26/27 on Jan 15, following the central bank''s intervention to mitigate the currency''s surge. The local currency, however, put up a strong resistance and eased slightly against dollar due to heavy capital inflow in the ongoing mega public offer of Reliance Power Ltd.

In quiet trade at the Interbank Foreign Exchange (forex) market, the Indian unit remained trapped in a small range of 39.2450 and 39.3000 during the day after resuming barely changed at 39.28/29 a dollar. The Reserve Bank of India (RBI) aggresively bought dollars to offset any positive impact on the rupee of strong portfolio inflows into primary market, forex dealers said. The central bank was keen to block the rupee''s surge on the back of inflows into the Asia''s fast-growing economy.

A world-wide stocks plunge, however, weighed on the rupee sentiment. Indian benchmark Sensex ended 383 points or about 2.0 per cent down on growing worries about the US recession while Asian indices fell in a range of 3.4 to 5.4 per cent. The dollar remained weak against major world currencies in overseas markets.

The RBI, however, fixed the reference rate for the US currency at Rs 39.27 per dollar and for the single European unit at Rs 58.29 per euro. The rupee premiums on forward dollar ended lower due to fresh receiving by exporters.The benchmark six-month forward dollar premiums payable in June ended at 35 - 37 paise, down from 39 - 41 paise on Tuesday and the far-forward maturing in December ended weak at 66 - 68 paise from 68 - 70 paise previously.

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