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Rupee slumps to all-time low of 47.16/$

The rupee ended Wednesday at a new closing low against the dollar, although it was only marginally weaker than the previous day's close, in thin volumes in the absence of corporate interest and very little inter-bank activity, dealers said.

But the outlook on the rupee had turned slightly bearish with dollar supplies having reduced, the rupee continuing to be overvalued in trade-weighted terms and recent falls in some Asian currencies, they said.

The rupee ended at 47.1525/1600 per dollar, marginally weaker than its previous close of 47.1400/1500.

It has stayed below 47 through this month. Its previous closing low was 47.1450/1550, hit on July 2.

"A state-run bank sold (dollars) at 47.1550, else the dollar was comfortably bid today," a dealer with a private bank said.

The customary inter-bank dollar sales on Wednesdays were not seen, with low interest differentials reducing the benefit in weekend swaps.

Despite the dollar shedding gains against European currencies and the Japanese yen in recent sessions, the rupee remained three percent overvalued on a trade-weighted basis, dealers said.

Adding to worries was the Taiwan dollar's weakness, the Singapore dollar's drop to 11-year lows on Tuesday and worries over Argentina's debt burden.

Dealers said the drop in crude oil prices -- August futures prices are at just over $25 a barrel -- was a positive factor for the rupee but slowing foreign fund flows may drive the currency gradually lower.

Foreign fund inflows, which have supported the rupee so far in 2001, have been tapering off, putting pressure on the overvalued rupee in the past two weeks.

Data from the capital market regulator showed that up to July 9, their net purchases for the month totalled just $24.3 million. Their net purchases in June were $240.1 million.

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