Amid volatile trading that reflected the concern over the European debt crisis and the demand from importers, the rupee fell further against the dollar, albeit marginally.
The rupee ended the day at 49.46 on Monday, down by three paise against the greenback. It had closed at 49.43 on Friday. Foreign exchange dealers and treasury officials said even though the range of the rupee’s movement was less, it remained volatile in that band. Last week, the range of the rupee's movement went as high as 100 paise. On Monday, it declined to 55 paise.
According to Clearing Corporation of India data, the rupee opened lower at 49.65 a dollar from the previous close of 49.43 at the Interbank Foreign Exchange market. It touched a low of 49.78 in intra-day trading, in line with sluggish local stocks.
Concern on the debt crisis continues to weigh on global investors. The strong demand for the dollar from importers also contributed to the rupee's fall, said the treasury head of a large public sector bank.
Foreign institutional investors withdrew over $ 490 million in the last two days last week, and this exerted pressure on the rupee. The demand for the dollar from importers and banks amid firm a dollar abroad, during the initial stages, weighed on the rupee. It recovered to touch a high of 49.33, reflecting a rebound in share values and fresh dollar selling by exporters on expectations of another intervention by the apex bank, as was seen last Friday, a dealer said.
On the effect of the central bank's intervention, a currency dealer with a foreign bank said the market had factored in the guidance from policymakers, including the government. Given the improvement in global indices, the rupee is expected to move in a relatively stable range.
Last week, Reserve Bank of India Deputy Governor Subir Gokarn said all the central bank did was monitor market movements and acted only in case of excess movement of the rupee against international currencies.
The Bombay Stock Exchange's benchmark index, Sensex, declined by over 360 points in early trade, but partially recovered the losses, ending the day lower by 111 points. The dollar index, which rose in the early stages, was down by nearly 0.2 per cent against its major rivals, while New York crude oil was trading at above $80 a barrel in the European market on Monday.
Looking at the strong dollar, trading for the dollar-rupee exchange would be 49.40 to 49.90 tomorrow, said Pramit Brahmbhatt, chief executive, Alpari Financial Services (India).
