Rupee loses ground, 1$ --> Rs.45 : Forex

NEW DELHI: Rupee depreciated sharply against dollar on Wednesday as it breached the Rs 45 a dollar level to close at 45.12 against previous close of Rs 44.84 on Tuesday. Softening of crude prices has boosted the perception regarding US economy, which has pushed up value of dollar against most of the currencies in the world. Rupee also suffered because of that and it touched the lowest level in the last 22 months on Wednesday. While exporters, who stand to gain, rejoiced the fall, importers ran for cover. The worst hit will be the oil marketing companies, which import crude. As they are selling at substantially lower price than the import cost, depreciation of rupee will make the cost of imported crude higher and increase their deficit. While importers rushed to buy dollar, expecting it to appreciate further in the short-term, exporters withdrew from the market. This widened the gap in the demand and supply. A senior banker said unless the Reserve Bank Of India intervenes with dollar supply, fall of rupee will continue. The depreciation will also affect the government's effort to contain inflation. As prices of commodities are fixed on the basis of landed imported value in the rupee term, the depreciation of rupee will push prices up. The good news is that prices of commodities like steel and copper are falling in the international market. But, the depreciation in rupee against dollar will moderate the impact of fall in the global prices in the domestic market. A senior banker said that so far, RBI is not intervening to arrest the fall in rupee as this will improve India's export competitiveness. But, he said the central bank would not allow the currency to fall below the current level. Therefore, he added that RBI is likely to intervene in the market by increasing the supply of dollar to arrest the fall in rupee against dollar. As dollar appreciated against most of the currencies, the gold price in the international market fell sharply. On Wednesday, the yellow metal traded at $763.20 per ounce - the lowest level since October 25, 2007. It fell by over Rs 200 per 10 gram in the Indian market. On Multi Commodity Exchange, gold closed at Rs 11,441 per 10 gram. The silver price also fall sharply to close at Rs 18,550 per kg.