Rupee plummets below 55 level

Mumbai, May 21: The

today plunged below the psychological 55-level to close at all-time low of 55.04 against the

amid robust demand for the US currency from banks and importers, but there was no visible RBI action to shore up the domestic unit from its record low levels.

At the Interbank Foreign Exchange (Forex) market, the domestic unit opened slightly lower at 54.45 a dollar from last weekend's close of 54.42 and immediately touched a high of 54.44. However, it soon started falling and at the fag-end trading breached the crucial 55-level and closed at 55.03, a fall of 61 paise or 1.12 per cent from its previous close.

Forex dealers said though rupee plunged to record low levels for the third day in a row, RBI was conspicuous by its absence in the forex market. Dealers, however, said RBI could intervene with more policy measures when markets resume tomorrow.

"Rupee breaching Rs 55 is a bit of worry as this has been seen as a strong resistance level. However, we expect the government to come up with some measures, which will help the domestic currency to pull back from the current levels," said NS Venkatesh, Head of Treasury, IDBI Bank.

He also said rupee is likely to appreciate tomorrow as additional liquidity from the exporters' Exchange Earner's Foreign Currency (EEFC) accounts will be added to the system.

TS Srinivasan, GM (Treasury) of Indian Overseas Bank said there is a short-term weakness. "Going ahead, the central bank is likely to intervene without which the weakness in the currency is likely to continue," he said.

The depreciating rupee cast its shadow over the Indian benchmark Sensex, which pared its early gains to end with a modest gain of 30.51 points. Yesterday, Finance Minister Pranab Mukherjee had said that the steep fall in the rupee was a matter of great concern and the Centre was trying to resolve the situation.

"It is a matter of great concern. We are watching the situation. The Centre is not (sitting) idle. We are trying to resolve (the issue)," Mukherjee had told reporters in Kolkata.

PTI