Rupee weakens 52 paise in the week

Mumbai, Mar 8: The Rupee slided 52 paise against the US Dollar to its six month's low at 40.53/54 on strong bearish trend in the Indian equity market amid extremely negative global cues in the week ended March 7. The partially convertible Indian currency has weakened sharply to hit a fresh six month intra-day low at 40.64 per dollar, tracking the Indian bourses falling over nine per cent in the week. It had hit the level of 40.65 per dollar on September 10, 2007, dealers said. Apart from worries over global economies heading towards recession, dealers attributed the fall of the local unit against the greenback to soaring crude oil prices in the global market and zooming inflation back home.

Dealers felt a complete chaotic situation in most of the session during the week as there was a huge pull out of the US currency from the Indian markets, causing a sharp depreciation in the Indian unit. The crude oil price had hit a record high at 105.40 per barrel and the wholesale price index (WPI) based inflation in the country had hit a ten month high at 5.02 during the week, pushing the rupee to its lower end as the foreign banks hoped to buy dollars at its higher value for their custodians, a senior dealer with a leading private bank told UNI.

''Though the US currency weakened against other global currencies like Euro and Yen, it improved against the rupee due to soaring crude oil prices as it was seen during the week that oil-based banks bought dollars for their custodians at its lower rate,'' Development Credit Bank Associate Vice President Treasury and Financial Institutions Group Navin Raghuvanshi said. The market had witnessed an optimum volatility during most of the sessions in the week amid negative sentiments and rupee had been influenced by the movement in the equity market, further, the forex outlook would trace the stock market behaviour, Mr Raghuvanshi added.

The key indices of the Indian bourses Sensex and Nifty tumbled over nine per cent during the week. Sensex had dropped below 16K level to a six month low taking a row with the Asian markets on weak global cues. Meanwhile, the US currency slid to a record low against the Euro and other major global unit on heightening worries over the deteriorating condition of US financial system on reports that a large US mortgage lender might feel the crunch.

UNI