The Asian crisis appeared to be re-enacted all over again with a plunging yen pulling down other Asian currencies and stock markets. Fears of a speculative attack on the Hong Kong dollar and Chinese Yuan re-emerged. The flu appeared to be spreading to the European and the US markets; in early trade, the FTSE was down 46 points while Dow Jones opened 11 points lower.

The rupee touched a historic low of 42.42/45 against the greenback on Wednesday before staging a smart recovery to close at a new low of 42.23/28 as nervousness continued to grip the inter-bank foreign exchange market. The rupee has depreciated by 6.3 per cent in the past onemonth since India conducted five nuclear tests. The year-on-year depreciation in 1997-98 was 9.7 per cent.

Opening around 42.25/30 per dollar, modestly lower from the overnight finish of 42.22/24, the rupee plunged to an intraday low of 42.42/45 on persistent demand for dollars from banks in the absence of dollar-selling by the State Bank of India (SBI) in support of the rupee.

The rupee, however, later recovered lost ground on dollar-selling by companies and hovered around 42.30/35 for the better part of the day's business. "The rupee recovered because of profit-booking by banks and selling by a few exporters", a treasurer in a British-based bank said.

Towards the fag end, the SBI renewed its active dollar offers and with other banks unwinding long dollar positions, the rupee initially rallied to 42.26/29 and then settled at 42.23/28 at the end of trading hours - a new low.

The forward premium rose today giving an indication that the rupee might strengthen. The six-month annualised forward coveropened at a high 10.65 per cent as compared to Tuesday's close of 10 per cent. However, it closed at 9.67 per cent. "I think this is a good time to start receiving premium", ING Bank's country treasurer Atul Sahasrabuddhe said.

Fears of payment crisis: On the stock markets, fears of defaults by brokers set off panic-selling, even as authorities reiterated that there was no payment crisis. The Sensex has lost nearly 486 points since the presentation of the budget.

Marketmen sounded particularly unhappy about the failure of the BSE's top brass to take timely corrective action against a cartel of bear operators. This, according to them, was the primary reason for the fall over the past few days. Exchanges' failure to clarify the extent of truth in the defaulters' list, which kept cropping up in the market, confused the players even further.

According to market sources, FIIs like Capital International, Schroders, Biktet, Morgan Stanley and UTI offshore funds were reported to have sold huge chunks ofpivotals which includes MTNL, Larsen, SBI and ITC. The FIIs net sales so far have been to the extent of Rs 482 crore in the first week of June.

However, moderate support by UTI and SBI Mutual fund during the mid-session provided the much-needed bottom level support to the pivotals.

"We were buyers today as well. The valuations are attractive and this looks like an artificial fall," said a top UTI official.

GDRs slump to new low

The Skindia GDR index touched an all-time low of 646.99 points during the intraday session to register a net fall of 7.29 per cent over Tuesday's close. Over 60 per cent of the GDRs comprising the Skindia index recorded new lows today. Among the worst hit were Videocon International and Arvind Mills which traded at $2.35 and $1.15 respectively to record losses to the tune of 21.67 per cent and 14.29 per cent.

The GDR of Reliance was quoted at $6.88 to register a net loss of 9.47 per cent, to trade at a discount of over 10 per cent to its closing on the local bourses.However, the GDRs of SBI and ITC, which dipped by 7.66 per cent and 5.56 per cent, traded at a premium to its underlying shares.

European shares follow Hong Kong

London: Shares across Europe fell early on Wednesday in the wake of heavy losses on the Hong Kong market and dealers' cautiousness before a speech by Federal Reserve chairman, Alan Greenspan, later in the session, according to an AFP report. The FT-SE 100 index of leading shares fell by 54.4 points to 5,965.4 points.

In Paris, the CAC 40 index opened 34.38 points lower at 4,167.48 points and in Frankfurt, the DAX 30 index opened 16.29 points lower at 5,743.74 points. The Japanese currency collapsed through the 141-yen barrier against the dollar in Tokyo Wednesday, falling to a new seven-year low and punishing stock markets across Asia.

Deputy US treasury secretary Lawrence Summers said at a Paris meeting of deputy finance ministers that the Group of Seven industrialised nations had discussed the weak yen. He said past US and Japaneseconcerns ``regarding the weakness of the yen and the possible adverse consequences for the Asian and global economy were highlighted". Just before he spoke the yen was driven to a low of 141.57 yen, its worst rate since June, 1991.

The currency was sharply down from 140.20 yen in mid-morning here and 140.15 yen in New York late Tuesday. China has already admitted that its economy is being hurt by the slump in Japan, where falling consumer demand is restraining Asian recovery and a weak yen is pressuring Beijing to devalue the yuan.

Hong Kong's Hang Seng index plunged 4.9 per cent, following a 2.3 per cent fall in the previous day. In Bangkok the Stock Exchange of Thailand's index hit a 10-year low, dragged down by the yen, losing 5 per cent by mid-afternoon trade.

South Korean share prices dropped 4.3 per cent and prices fell more than 2 per cent in Singapore, Malaysia and Taiwan by the end of their morning sessions.

Tokyo has pinned its hopes on a record-sized 16.6 trillion yen ($125 billion)stimulus package announced in April, although official figures out on Friday are widely expected to confirm that the world's second largest economy has been in recession since late last year. ``The basic stance of the United States is that some measures on the foreign exchange trade will be taken after Japan has done all it can do domestically," he said.

Hammering continues in kerb trading

Pivotals continued to be hammered down by nervous operators at the late evening kerb markets also. At 8.45 pm, ITC was quoted at a discount of Rs 5 against its official close of Rs 610.75. Similarly, other pivotals like SBI, Reliance and Tisco continued to be quoted at a discount of over 1 per cent to its official close on BSE. Both BPL and Videocon came for severe drubbing in the unofficial market. However, operators refrained from taking positions at the discounted price of Rs 250 in case of BPL and Rs 97 for Videocon International.