Rupee suffers against US dollar buyers

17.05.10 Mangalore : The banks, oil companies and importers are hankering and hungering for more US dollars and this attitude has weakened the rupees this week further.

In view of sovereign (state) debt crises in Greece, Spain and other Euro (region) countries, investors are moving out of Europe to safer havens where US dollar prevails. The demand for a dollar currency will weaken on already unstable Rupee further, a finance specialist of SMC capital stated in Mumbai. The Rupee is in the range of Rs.44 to 46 a dollar at present, but the Euro turmoil is likely to revive US economy, but India will be under pressure as the exchange rate may touch Rs.45.70 a dollar in this week, from Rs.44.80 last week. European near bankruptcy has pushed Indian rupee to chase the greenback (US dollar), says a finance handler in Mecklai Co. The Sensex ended at 16,994.60 on Sunday. There is a reduced risk appetite among investors who ignore Eurozone but cannot enter Indian markets. Such weakening of a rupee is only due to external factors (beyond our control), says C. Chandrashekhar, a financial expert.

The Forex (foreign currency exchange) reserves of RBI fell by a huge weakly downturn from 3.4 billon dollars earlier to the latest 2.76 billion dollars, the sharpest fall since January 2009 till now. Foreign currency assets, fell by dollars ($) 3,300 million to reach 251, 473 millions presently, the Central Bank stated in a release.

The fall in Euro value against the US dollar has created a sharp fall in Indian reserves, said Arun Kaul, CBI executive director. RBI may not intervene in the forex market, while watching its rise and falls, he added.