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Rupee plunges 24 paise on talk of yen, yuan slide; Rs 42.89/91

The Indian rupee fell sharply by 24 paise against the US greenback on some unfavourable and undermining factors, on the interbank foreign exchange market today.

Yet another downgrading of India's sovereign rating, this time by the Duff and Phelps, continued Asian market and currency crisis and political uncertainty over the Cauvery river water sharing controversy caused some panic in the market, resulting heavy all-round dollar buying by corporates and banks fearing further fall of the rupee, dealers said.

Opening steady at Rs 42.67/69, the rupee moved only downwards on continued dollar demand and closed at Rs 42.89/91 against the previous close of Rs 42.66/67 losing its value by 24 paise. Major market player State Bank of India was also seen buying huge amount of dollars, dealers added.

The Reserve Bank of India has fixed the reference rate for US dollar at Rs 42.71 against Rs 42.69 of the previous day.

Forward premiums also shot up on heavy paying pressure on good import booking in all forward dollars. The sixth month and yearly annualised premiums were quoted higher at 8.20 and 9.02 per cent.

Cash/spot business transactions were conducted between 0.25 and 0.50 paise premium while cash/tom were done between level rates and 0.25 paise. The month-wise premiums in paise were: August 8-11, September 33-37, October 63-67, November 95-98, December 128-131, January 162-165, February 193-198 and March 231-236.

In the overseas market, the pound sterling remained nearly steady against dollar, while Japanese yen and deutsche mark weakened against the US currency. The rupee weakened against sterling, dm and yen and quoted lower at Rs 70.01 (69.55), Rs 24.02 (23.95), and Rs 31.22 (29.72).

In the domestic money market, the call money interest rates opened steady at 5.85-6.10 per cent ruled between 5.50-6.05 most part of the day before closing at 5.75-5.90 per cent.

Reports from foreign markets said most of the Asian markets and currencies slipped further early Tuesday on lingering fears that the ever-weakening Japanese currency, which fell to an eight-year-low, may force China to devalue its yuan. Investors in the Asian region were also dogged by a slump in Hong Kong shares to five-year lows, which was putting more strain on its currency link with the US dollar.

UNI