The rupee breached the `54 level to the dollar in early morning trade Thursday, going up to `54.32, a fall of 61 paise to the dollar, on heavy buying of dollars by traders, companies and FIIs. Speculators too had a field day. By late evening,
however, the RBI took forex traders by surprise by announcing measures that would stop the rupee’s steep decline. It closed at `53.72 to the dollar, and it is expected to strengthen by `1-1.50 on Friday.
The weakening rupee cast its shadow on stock markets — it was felt companies would see weaker balance sheets with the weakening rupee. Imports are dearer, and this affects companies that depend on imports for raw material.