A fortnight ago, when the withdrawal of Pakistani troops from Kargil gave way to guerrilla warfare, the nervousness of the forex markets started coming to the fore. The rupee has been on a roller-coaster ride against the dollar since last month. From a high of 43.20 against the dollar in mid-July, the rupee started dipping largely on account of corporate demand for dollars. The end of the month saw the rupee falling further to 43.31 due to high month-end demand of dollars. By August 9, the rupee had touched an intra-day low of 43.59 against the dollar before rebounding to finish the day at 43.41.
Says K.N. Dey, senior vice-president, Mecklai Financial & Commercial Services, a Mumbai-based forex trading firm, 'The shooting down of the Pakistani aircraft and sporadic violence in Kashmir had a momentary impact on the forex markets no doubt, but corporates today are far too mature for the nervousness to be long-lasting.' Concurs Amit Gupta, head of treasury markets, hsbc Markets: 'There was a minor movement of the rupee southwards which could be related to the border conflicts, but even in the extreme case, the rupee fell by a mere 0.75 per cent, which was hardly a cause for concern.'