MUMBAI (Reuters) - The rupee plunged to a record low on Thursday, driven down by another sharp drop in the stock market and broad-based dollar strength, but suspected central bank intervention kept it from testing 50 per dollar.
The partially convertible rupee closed at 49.81/82, off a record low of 49.86 but 1.1 percent weaker than 49.28/29 at close on Wednesday. The rupee has shed nearly 21 percent against the dollar in 2008. "The dollar has significantly strengthened against the euro, and there is continuous outflows of foreign funds, so the rupee is likely to continue weakening," said Naveen Raghuvanshi, an associate vice president with Development Credit Bank. "The rupee is at these levels only because RBI intervened heavily at 49.80/81 levels," he said, referring to the Reserve Bank of India. "Tomorrow the rupee will surely open above 50." Three dealers estimated the central bank sold up to $3 billion to support the rupee on Thursday. Indian shares fell 3.9 percent, taking their loss this month to 24 percent. The market, which is among the worst performers in Asia, is down 52 percent in 2008. Foreign funds have sold a net $12.2 billion of shares, after buying a record $17.4 billion last year, and those sales have weighed on the rupee. The dollar hit two-year highs against the euro and a basket of currencies on Thursday as hobbled global shares highlighted the possibility of a looming recession and encouraged investors to continue cutting risk exposure. Traders said heavy offshore-related dollar demand was also pushing the rupee lower. One-month offshore non-deliverable forward contracts were quoting at 51.79/94 per dollar, nearly 4 percent weaker than the onshore spot rate. Banks buy dollars in the spot market and sell them offshore to arbitrage the large price differential --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
