Rupee fell by 124 paise to close at nearly two-and-a-half year Low of 49.57/58 against Dollar

The rupee plunged by 124 paise to close at nearly two-and-a-half year low of 49.57/58 against the dollar on 22 September 2011. The depreciation is posing worries to policy makers on inflation front as a weak domestic currency will make imports costlier.

Economists  are of the opinion that if the rupee continued to move at its present pace it will likely breach the technical level of 52. If the RBI does not intervene the situation would get unmangable.

According to the forex dealers, the rupee plummeted as importers and banks rushed to buy dollars amid its sharp rise in the overseas markets to a seven-month high against major currencies.

The sharp fall in rupee came at a time when the government is battling high inflation. A weak rupee will make imports of petroleum products costlier thereby impacting prices. India imports 80 per cent of the petroleum products requirement.

At the Interbank Foreign Exchange (Forex) market, the rupee resumed sharply lower at 48.78/79 a dollar from overnight close of 48.33/34 and touched a high of 48.68. However later it fell to a low of 49.59 before settling at 49.57/58, a steep fall of 2.56 per cent. Its last weakest close was 49.77/78 on 14 May 2009. The rupee had registered a biggest fall of 152 paise or 3.08 pct on 18 May 2009.

The rupee declined against the pound sterling as well and ended at Rs. 76.43/45 from close of Rss 75.59/61 on 21 September 2011 and also remained weak to settle at Rs. 66.69/71 per euro from Rs. 66.02/04 previously. It too slumped further against the Japanese yen to Rs. 64.98/65.00 per 100 yen from Rs. 63.34/36.