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Rupee pulls back from 13-month low on RBI move |
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The rupee hit a 13-1/2-month low on Thursday and then pulled back as dealers said state-run banks sold dollars heavily, probably on behalf of the RBI and prompted investors to trim their long dollar positions.
The partially convertible Indian rupee ended at 42.96/97 per dollar, off an intraday trough of 43.21, a level it last tested in early April 2007. It was, however, 0.32 percent weaker than last Wednesday's close of 42.83/84.
The dollar selling started around 43.21 and the central bank is estimated to have sold about $100 million to $150 million, dealers said. It would be the first time the RBI had sold dollars since March.
The Reserve Bank of India has been a net buyer of dollars for more than two years. In the first quarter of 2008, it had bought $20.3 billion. Analysts believe the RBI’s intervention may have been to prevent the rupee's sharp fall rather than to defend a particular level.
Record high oil prices that topped $135 a barrel on Thursday would keep the rupee under pressure because of a widening trade deficit, traders said. India imports 70 per cent of its oil and refiners are the biggest buyers of dollars.
The rupee was 4.6 per cent over-valued on a trade weighted basis as on April 17, latest RBI data showed, and analysts believe its threshold for intervention is between 10-15 per cent.
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