Rupee touches four-month low against US dollar

Rupee touches four-month low against US dollar

Mumbai: The rupee fell to its four-month low of 41.70 against the dollar during morning trade as investors continued to cut their exposure on worries of global credit squeeze.

In active trade at the Interbank Foreign Exchange (forex) market, the local currency resumed sharply lower at 41.58/60 a dollar from the last close of 41.36/37 and later fell to nearly four-month low of 41.70 on heavy dollar demand.

The domestic unit, later, recovered slightly and was quoted at 41.60/61 per dollar in late morning deals.

A sharp surge in Japanese yen against the US dollar in overseas markets forced investors to unwind carry trades in the low-yielding yen, forex dealers said.

Investors had bought high-yielding assets such as the rupee financed by borrowing currencies with low interest rates, particularly the yen, commented a leading dealer.

The rupee was beaten also due to sliding equity market, which tumbled this morning by another 251 points to touch 14,107.17.

Asian indices too were sharply down during morning trading.

Foreign Institutional Investors (FIIs) pulled out about 261 million dollars between August 10 and 14 followed by a massive withdrawal of nearly 700 million dollars yesterday when the benchmark Sensex plunged by 643 points.