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Rupee's knee-jerk reaction to war

MUMBAI MARCH 20. The rupee plunged against the U.S. currency today due to heavy all round dollar buying on a knee-jerk reaction to the American-led air strikes against Iraq, but ended off low following fresh exporter dollar sales after the market factored in a reasonably short war, which would not disrupt the global economy.

In volatile trading at the interbank foreign exchange market, the rupee closed at 47.75/76 a dollar, sharply lower from Wednesday's finish of 47.6900/7000 after dipping to intraday low of 47.83/85 on a virtual scramble to cover dollar positions from all quarters. The rupee opened distinctly weak at 47.73/75 due to war fears.

Panic operators rushed to cover short dollar positions in early trading and sent the rupee hurtling down to a low of 47.83/85. But, the forex spot trading later stabilised and the rupee bounced back partly to 47.75/76 at close, following fresh exporter dollar sales, leading to unwinding of long positions by banks, dealers said. — PTI

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