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Rupee closes at record low of 47.17/$

The rupee slipped to a new closing low on Wednesday, after mostly trading in a narrow range earlier, as a late surge in demand caught a short market by surprise, traders said.

They said the late bout of demand, which some traders attributed to an oil firm, was light but resulted in a sharp movement as many banks were short.

The rupee closed at 47.1600/1700 per dollar, dropping about six paise in the last hour of trade after being stuck in a 47.10-47.11 band for most of the day.

It closed Tuesday at 47.1050/1150.

Its earlier closing low was 47.1525/1600 hit on July 13.

Dealers said both state-run and foreign banks bought dollars in late trade.

"There was an overhang of supplies in the last two-three days, leading banks to go short," a foreign bank dealer said.

Some banks sold dollars earlier in the day to benefit from the weekend carry, he said.

Comfortable dollar supply and poor demand had supported the rupee in recent sessions, boosting it to a two-week high on Tuesday.

"Some traders were expecting the rupee to gain to 47.09 and thought they could cover later. But instead of gaining, they have ended up losing by around six paise," a dealer with a state-owned bank said.

Dollar forwards were ranged in two-way trade amid market expectations that domestic money market rates would settle.

Traders said they expected domestic rates to stabilise as earlier expectations of an immediate central bank rate cut had receded.

The six month annualised forward closed at 4.65 per cent compared with Tuesday's 4.59 per cent.

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