Rupee drops below 57  Oil refiners feast on dollars

OUR SPECIAL CORRESPONDENT

Mumbai, June 22: The rupee crashed to a new intra-day low of 57.30 to the dollar — losing almost 100 paise at one time from yesterday's close of 56.31 — as oil refiners continued to slurp dollars amid falling crude prices and nervous global investors took comfort in the greenback to shield themselves from the vicissitudes of the global economy. After a brief recovery on dollar sales by exporters and squaring off of long dollar position, the rupee ended the day at 57.12 — still an all-time closing low; moreover, the 3 per cent depreciation over the whole week is the rupee's biggest weekly fall in nine months. Dealers said the RBI had made a feeble attempt to shore up the rupee by selling dollars. Analysts said the rupee was unlikely to come under severe pressure in the immediate term, but if the global turmoil worsened it could flirt with the 58-level. The analysts said the depreciation was largely because of strong dollar demand from oil companies — a paradoxical situation as even when crude prices rose the rupee had come under pressure. Besides, heavy dollar demand from companies to meet foreign currency convertible bond (FCCB) obligations had weighed on the Indian currency. Another influential factor is the global risk aversion that has led to investors fleeing to safe havens such as the dollar. Dollar gained against the euro and other currencies in the overseas forex markets amid global economic growth concerns, Moody's downgrade of the world's 15 biggest banks and mounting worries over Eurozone debt troubles, including the size of a bailout needed to save Spain's banking sector. "A series of weak data coming from the US, China and Eurozone and no further quantitative easing by the US have made the investors to move again towards risk aversion boosting the demand for the safe haven dollar," says Abhishek Goenka, founder and chief executive officer, India Forex Advisors Pvt Ltd. The flight away from riskier assets is putting heavy pressure on the rupee, the analysts said. They added that foreign investors had been net sellers in the stock exchanges and exporters had not been forthcoming in their dollar sales. After opening lower at 56.80 against the dollar today, the rupee recovered partially to 56.76 before it started losing ground again. It plunged to a life-time low of 57.30 before recovering some ground to end at 57.15, a fall of 85 paise, or 1.51 per cent, from the last close of 56.31. The Sensex, meanwhile, lost over 220 points during the day before recovering to close 60 points lower at 16972.51.