The rupee continued its downward march for the second successive day and ended at 40.35/36 against the US currency following sustained intervention by the RBI.
MUMBAI: The rupee continued its downward march for the second successive day and ended at 40.35/36 against the US currency following sustained intervention by the RBI and weak equity markets, despite heavy portfolio investments and sluggish dollar overseas.
The Reserve Bank of India (RBI) was said to be aggressively purchasing dollars to cap the local currency upsurge to prevent exporters.
In active trade at the Interbank Foreign Exchange (Forex) market today, the domestic unit opened better at 40.25/27 perdollar from Tuesday's close of 40.2750/2850 a dollar due to continued foreign funds inflows in equity markets.
However, suspected intervention by the apex bank pulled it down to settle the day at 40.35/36 a dollar, down by 7.5 paise over the previous close. It moved in a range of 40.24 and 40.36 a dollar.
Looking at the heavy dollar purchases by state-run banks on behalf of the RBI, traders resorted to covering their short dollar positions, leading to fall in the rupee.
The fall in the benchmark Sensex by over 95 points also partly depressed the rupee.
However, heavy capital inflows, which crossed USD 10 billion mark in the current year so far and is moving towards the record USD 10.7 billion level inflow in 2005, could not stem the drop in the rupee due to aggressive intervention by the RBI.
Meanwhile, the dollar declined to a new low against the euro on Tuesday and a two-month low against the yen as US stocks plunged on signs that housing credit problems are starting to spread.
Meanwhile, the RBI fixed the reference rate for the US currency at Rs 40.30 per dollar and for the single European unit at Rs 55.64 per euro.
The rupee premiums on forward dollar improved further on sustained paying pressure from banks and corporates.
The Benchmark six-month forward dollar premiums payable in December ended at 17 - 18-1/2 paise, up from 12-14 paise on Tuesday and the far-forwards maturing in June also closed higher at 51-1/2 - 53 from 46-1/2 - 48-1/2 paise previously.
In cross-currency trades, the rupee recovered against the British sterling and the Euro while it declined further against the Japanese yen.
The Indian unit recouped against the sterling to end the day at Rs 82.82/84 per pound from previous close of Rs 83.05/07 per pound while improved against the single European currency to Rs 55.42/44 per euro from last close of Rs 55.70/72 per euro.
However, it dropped further to finish at Rs 33.48/50 per 100 yen from overnight close of Rs 33.34/36 per 100 yen.
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