Rupee hits lifetime low of 49.50 against dollar

The rupee hit a lifetime low of 49.50 against the US dollar on Wednesday as the greenback gained against most currencies globally. However, intervention by the Reserve Bank of India (RBI) in the domestic foreign exchange market saw some recovery in the later part of the day. The rupee, thus, closed at 49.30, which is also a record low.

On October 10, the rupee had touched its earlier all-time low of 49.26 against the dollar. Though it had gained after that, the currency closed at 49.06 yesterday. The rupee is among the biggest losers against the dollar so far this year, shedding around 20 per cent.

on Wednesday’s decline was attributed to the US currency gaining against other currencies and also the 500-point fall in the Sensex. The dollar’s rise against major currencies, including the Euro and the Japanese yen, prompted dealers to buy the currency. In addition, they were buying dollars on behalf of their institutional clients, who are pulling out money from the stock markets.

The stock markets fell on Wednesday on fears of a global recession. In recent weeks, foreign institutional investors (FIIs) have been heavy sellers in equities as they are withdrawing money from markets such as India to meet requirements in their home country.

So far in October, FIIs have been net-sellers of shares worth $2.86 billion though they bought $28.2 million of equities on Tuesday. They have sold shares worth $12.2 billion this year as against purchases of $17.4 billion up during 2007.

Dealers said the rupee would have fallen more had the public-sector banks not intervened in the market on behalf of RBI.

In the forwards market, one-month premium hardened to 2.32 per cent from 2.08 per cent on Monday. In three-month segment, forward premium rate declined to 3.54 per cent compared to 3.83 per cent on Monday.

In the overseas non-deliverable forwards market the one-month rate 50.75 a dollar, while the local outright forward rate was 49.43, providing an arbitrage opportunity.

India’s foreign exchange reserves have dropped by about $42 billion to $274 billion as on October 10, from a record high of $316 billion in May as a result of the heavy intervention by RBI. During the last week, reserves fell by a record $10 billion.

In the currency futures market, according to National Stock Exchange data, the November futures were at 49.72 against the dollar.