Mumbai, Feb 23: The Rupee witnessed a steep fall by 38 paise to hit more than five month low at 40.04/06 against USD amid high volatile trading sessions in the forex market in the week ended February 22.
Resuming the first session on Monday with a marginal gain at 39.65 per dollar on positive note in the local equity market, the partially convertible Indian Currency moved in wide a range gap between 39.64 and 40.08 per dollar on bouts of alternate buying and selling of dollars, through out the week.
Sustained demand of dollars by the exporters and foreign banks in the inter-bank foreign exchange (Forex) market along with the strong outflows from the equity market, caused a sharp depreciation of rupee against the greenback, dealers said.
Heavy buying by the major foreign banks including HSBC and Standard Chartered bank for the foreign institutional investors, during the last two sessions of the week, pulled the rupee to a weaker end. In most of the trading sessions, the Reserve Bank of India was in selling mode, dealers asserted. However, their was no buying support by the public
sector banks as most of them are facing tight liquidity conditions.
Further, dealers opined that the fresh reports of US economy getting deep into recession and heightening possibility of rate cut by the US Federal Reserve could create a panic situation in the other markets including Asian and European markets in the near future. Whereas, rupee is expected to follow the trends in the local equity market, dealers added.