Mumbai: The rupee fell sharply on 6 June 2007 to end at one-week low of 40.66/67 against the greenback following aggressive intervention by the Reserve Bank of India and a sharp slide in equity markets.
The RBI is suspected to have made heavy dollar purchases through state-owned banks when the rupee touched 40.52 level before the midsession.
In active trade at the Interbank Foreign Exchange (forex) market, the local currency fluctuated widely in range of 40.52 and 40.74 after resuming weak at 40.55/56 a dollar against yesterday’s close of 40.52/53 a dollar.
Heavy dollar demand from public sector banks and a 1.92 per cent plunge in the benchmark Sensex weighed on the rupee sentiment, forex dealers said.
Banks were believed to be making dollar purchases on behalf of the central bank as well as oil refineries, commented a leading banker.
The central bank is preventing the rupee surge past 40.50 level for the last few days, according to traders, which were optimistic about the rupee’s sharp rally on the back of heavy capital inflows by the month-end.
The rupee stood firm, supported by sustained capital inflows into Indian equity markets and expectations of huge flow of foreign funds following a couple of massive IPOs.
The proposed IPO by property developer DLF Ltd is expected to raise about $2.4 billion in the month, while ICICI Bank has planned to mop up nearly $5 billion through public issue in India and abroad.