Mumbai: The Indian rupee slipped past Rs48 per dollar early on Tuesday to its lowest since January 2003, but trimmed losses on suspected central bank intervention and dollar sales by some custodial banks.
By 10:50am, the partially convertible rupee was at Rs47.86/87 per dollar, 0.1% weaker than Rs47.80/81 at close on Monday.
In early trade, it fell to 48.01, its lowest since 6 January, 2003. At this level, it has shed 17.9% in 2008.
“There was a bit of panic dollar buying due to weak Asian currencies, but the Reserve Bank came in to intervene immediately, which caused the long dollars to get out,” said Agam Gupta, head of currency trading at Standard Chartered Bank.
“Later there was also some dollar selling by custodial banks. The rupee should stay in a range of Rs47.60 to Rs48.0 through the day,” he added.
Dealers said the dollar’s strength overseas also hurt rupee sentiment. The dollar and the euro jumped to session highs against the yen after Australia’s central bank slashed interest rates by a full percentage point.
India’s main share index rose as much as 3.2% early, after concerted moves by regulators to improve liquidity, but shaky world markets kept a check on sharp gains.
Dealers said refiners were expected to push up dollar purchases to buy oil, which was trading below $90 per barrel. Oil is India’s biggest import item.
The rupee is likely to remain under pressure in the near term and could test Rs49 to the dollar in about a month, with the central bank not expected to aggressively defend the unit at any particular level, dealers said.