The rupee tumbled to an over four-month closing low of Rs 45.60/62 per dollar on Friday, following heavy all-round dollar demand, triggered by concerns over the pace of reforms after Left parties demanded the scrapping of the divestment policy of the NDA government.
Nervousness once again gripped the interbank foreign exchange market, as wary operators rushed to cover dollar positions from the onset of business, despite a positive start at Rs 45.23/26 per dollar.
Fears of a slowdown in the economic reforms process sent the rupee hurtling down to a low of Rs 45.68/70 in late afternoon deals, before recovering somewhat to finish at Rs 45.60/62, a whisker away from Rs 45.6250/6350 logged at the close of trade on January 6, dealers said.
The rupee declined by a whopping 33 paise from overnight closing levels of Rs 45.26/29 after nervous participants scrambled to cover dollar positions on renewed worries that the reforms process could take a backseat, they added.
The Left parties, including the CPM and CPI demanded the disbanding of the divestment ministry immediately before the formation of the government at the Centre.
Surging global crude oil prices and interest rate uncertainties also weighed heavily on rupee value, a forex dealer said.