Mumbai, May 29: The rupee on Monday fell to a new all-time closing low of 44.49 on sustained dollar demand from importers and corporates. The Indian currency dropped to an intra-day low of 44.52 in afternoon trades, but recovered some losses on good dollar selling by the State Bank of India (SBI) ahead of close of session. Opening unchanged from the previous close at 44.37/39 per dollar, the currency eased to 44.42 in mid-morning deals. Dealers said dollar sales by a few public sector banks kept the rupee's downward journey on hold for some time, before another bout of dollar buying resumed the rupee's fall. The rupee ended at 44.49/4950."There was a huge month-end demand from corporates. This buying is expected to continue tomorrow, with the rupee expected to fall further to 44.60-65 levels, unless the SBI comes and sells in the market," eMecklai senior vice-president KN Dey said. "The rupee's fall was a result of bunched up demand from importers," Essar group treasurer NS Paramsivan said.
Dealers said there was a large dollar outflow of around $150 million by an aluminium company reportedly Hindalco. "A few other corporates were buying brisk amounts at various levels," a dealer said.
Exporters were holding back bringing forex proceeds hoping the rupee to plummet further. The exporters' action came in the face of the Reserve Bank of India (RBI) imposing a minimum rate of interest of 25 per cent on overdue export bills and a 50 per cent surcharge on lending rate for import finance.
Dealers said SBI's selling was not necessarily on behalf of the central bank. The RBI, in its measures announced last Thursday, committed itself to sell dollars through the SBI and meet forex needs towards oil imports and some government debt payments. Forward premia ended lower amid a mix of receiving by banks and paying by importers hedging some payables. The six-month premium ended at an annualised 2.79 per cent compared with Friday's 2.88 per cent.
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