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Rupee breaches 43 level, but settles at Rs 42.92

The rupee further depreciated by about 17 paise against the US greenback from the previous close of Rs 42.70/75. The impact of Moody's downgrade rating continued to rattle the forex market while Sinha's statement yesterday that the government would not defend the rupee and that the exchange rate should be determined by demand and supply caused some panic among the speculators, leading forex dealers said.

The rupee opened lower at Rs 42.80/85 and nosedived beyond the historic level of Rs 43.00 immediately after business opened in the Bombay market. Some business was done at a record low of Rs 43.02 with panicky exporters buying huge amounts of dollars fearing a further crash in the rupee value.

Marketmen, many of whom were expecting the Reserve Bank of India's intervention were also nervous after hearing the finance minister's statement and started buying dollars heavily when the market opened today, dealers said.

However, profit booking by exporters at higher levels helped the rupee recover and close at Rs 42.90/92 level towards the fag end of session.

The State Bank of India also did not come forward to arrest the fall of the rupee, dealers said.

Forward premiums, which shot up in the morning, came down slightly later with exporters selling nearforward dollars while the farforwards remained steady.

Moderate import booking was done in dollars, pound sterling, Deutsche mark and Japanese yen.

The RBI has revised the reference rate for the dollar to Rs 42.92, up by 23 paise from the previous day's rate of Rs 42.69.

The six-month annualised premiums and yearly premium were quoted higher at 12.30 per cent and 11.85 per cent respectively.

Cash/spot business was done between 2.5 and 3 paise premium, while the cash/tom was done at 1.25-1.50 paise level. The monthwise premium were June 3-5 paise, July 55-58 paise, August 191-104 paise, September 145-148 paise, October 186-191 paise, November 227-232 paise, and December 268-272 paise.

In the world market, the pound sterling remained almost steady, Deutsche mark strengthened while the Japanese yen weakened against the US dollar. The rupee weakened against most of the foreign currencies today and quoted Rs 71.64 per pound, Rs 23.89 per mark and Rs 31.07 per yen.

The rupee had suffered a major setback in the month of May, particularly after the nuclear tests were conducted by india. The US sanctions and downgrading by Standard and Poor led to a major fall of 197 paise in the rupee value against the American greenback to Rs 41.68/70.

The rupee which was at Rs 39.71/73 on April 30, was quoted at Rs 41.68/70 on May 30, having witnessed wild fluctuations during the month.

Both the budget proposals seeking to woo foreign investments, and the RBI's announcements cancelling the arbitrage between the money and forex market and reducing the repos rates by one percentage in June failed to change the market sentiments.

The downgrading by Moody's pushed the rupee further down by about 73 paise in just two days. The rupee sank by 122 paise in the month of June, taking the total depreciation in May and June to 319 paise or Rs 3.19.

The increasing net outflow by foreign institutional investors from the capital markets was one of the major reason behind the major fall in rupee value, dealers said.

UNI