The rupee weakened by almost 6 per cent within a fortnight in April. A depreciation of this magnitude took place after a gap of almost 10 years. "Such a sharp rupee depreciation was last seen after the nuclear tests conducted by India at Pokhran in 1998", said a dealer.
Dealers maintained that if the dollar buying continued at this pace, the rupee may touch 43 on Friday itself. The spot rupee opened at 42.40 and fell to a low of 42.52. It subsequently touched an intraday high of 42.31 following aggressive dollar selling by exporters.
However, at these levels, importers and banks struck deals to buy dollars resulting in a fall to 42.75 to a dollar. While oil companies continue to buy dollars, banks are also active in the non deliverable forward market.
The non deliverable forward market is a derivative market where foreign investors take a position on the rupee dollar exchange rate in the overseas market. The current view on the rupee is bearish, which may lead to a notional purchase of dollars for investing overseas.
These markets are mostly operative in Singapore and Hongkong. Banks or companies with active subsidiaries or branches in these countries could play in the market.
