In the forwards segment, the six-month annualised forward cover ended weaker at 9.29 per cent, against its Tuesday's close at 9.13 per cent. Prices of government securities fell by 20-30 paise across all maturities as the panic in the forex market spilled over to the securities market as well. The overnight call money market, however, remained easy.

The Reserve Bank of India (RBI) did not intervene in the forex market. Although dealers said that the rupee recovered to 41.30/35 against the dollar in mid-morning trade on the back of dollar sales by the State Bank of India (SBI), SBI sources said the bank kept away from the market.

Sources close to RBI said the centralbank is unlikely to intervene in the market in any manner till the budget is presented. "The budget will play a crucial role in deciding the movement of the Indian currency. The RBI will not try to defend the rupee at any level now as that will add to the panic," sources said. Opening the day at a wide 41.25/41.30 -- against its previous close of 41.17 -- the rupee was seen at 41.40 soon thereafter, moving downwards to hit its historic low of 41.50. Dealers said that a few trades were done at this level. Banks were seen squaring up at this point. Along with corporate and exporters dollar sales, the rupee quickly gained to 41.40 thereabouts.

The State Bank of India reportedly sold dollars at 41.35-41.40 level. SBI officials in Calcutta, however, denied any such action. In later day trades, the dollar hit its day's low of 41.22 to finally close at 41.31/35, compared to its early lows. "There was sustained corporate demand for dollars throughout the day," said Global Trust Bank's treasury head AnandAnjan.

Others like Standard Chartered Bank's chief dealer-forex Sharukh Wadia said: "Trades were volatile...things turned calmer after the Reserve Bank made enquiries and the State Bank spot dollar sales".

In the forward segment, premiums opened weaker by about 3 paise across all maturities from their Tuesday closing. Towards close of trades, forwards had gained on receiving pressure largely in the near terms. June dollars ended at 33/35 paise, July at 62/64 paise, August at 93/95 paise, and September at 124/127 paise. The six-month annualised forward cover finished at 9.29 per cent with the one month at 8.87 per cent, two months at 9.29 per cent and three-month at 9.20 per cent.