Falling rupee hits bourses

MUMBAI, AUG 22: Bears seem to be back with a bang. The fall of the rupee against the dollar and the imminent hike in petrol/diesel prices forced bulls to run for cover, sending the share prices and indices crashing. The Sensex fell by 108 points as a result of the selling pressure.

Foreign institutional investors (FIIs) led the bear run with other speculators following suit on the Bombat Stock Exchange. Dealers expect the downward trend to prevail after United Front coalition agreed on the need to hike oil prices to plug a mounting oil subsidy bill. Foreign funds sold heavily as the rupee value against dollar eroded further to a new low on Friday inducing fears of a devaluation of the Indian currency.

The rupee has already depreciated by about 1 per cent after the prime minister IK Gujral made a statement that the finance ministry and the RBI were working out an exchange rate band for the rupee vis-a-vis the dollar.