Rupee crashes 80p against dollar as stocks take a beating

The rupee today crashed by 80 paise, the biggest single-day fall in 15 months, against the US dollar on a sudden bearish turn in equities amid stronger dollar overseas.

Dollar buying by banks to meet client demand and corporations on expectation of a further rise in dollar abroad owing to the current global crisis, also weighed on the rupee, foreign exchange dealers said.

In fairly active trade at the interbank foreign exchange market, the domestic unit closed at 47.16/17, a steep fall of 1.73%. Earlier, the rupee had ended lower by 81 paise on March 2, 2009.

The benchmark Sensex slumped by 372.60 points, or 2.20%, on worries over the slowdown in China and South Korea's economic growth.

European stocks, too, were trading sharply lower while US stock index futures indicated a remarkably weak opening on doubts over the global economic recovery. Some euro zone countries also expanded at a sluggish pace in May.

As a result, investors were forced to dump riskier assets and go for the dollar, which rose to a 15-month high against a currency basket.

Meanwhile, global crude oil was trading at close to US $72 a barrel in London today. The benchmark six-month forward dollar premium payable in October dropped to 51-53 paise from 55-57½ paise on Monday. Far-forward maturing in April also dipped to 92½-94½ paise from 101½-103½ paise previously.

The Reserve Bank of India fixed the dollar reference rate at Rs46.69 and for the euro at Rs57.26.

The rupee reacted downwards against the pound, the euro, and the yen. It plunged against the pound to close at Rs68.83/85 a pound from Monday's close of Rs67.16/18. It also declined against the euro to Rs57.39/41 per euro from Rs57.02/04 previously.