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Rupee recovers 68 paise, Rs 42.82/92; forward premia rule high

The Indian rupee appreciated smartly by 68 paise closing below Rs 43 level against the US dollar at the interbank foreign exchange (forex) market today following modest dollar selling intervention by the Reserve Bank of India and a package of measures to tighten the liquidity.

According to leading forex dealers, the central bank reportedly pumped in about $ 100 million to stabilise the rupee value against the greenback.

The major market player State Bank of India also sold dollars in the market, dealers said.

Although the RBI succeeded in stabilising the spot rupee, forward dollar premia shot up on CRR hike and increase in repo rate. Near and far forwards dollar premia jumped up to 10-30 paise and 50-60 paise rspectively.

Opening at Rs 43.52/53, the rupee moved down to Rs 43.65/67 level in the morning, but immediately after the RBI's intervention and announcement of measures, it strengthened to Rs 42.75/85 level, before closing at Rs 42.82/92.

Commenting on the RBI's measures and rupee's gain Mecklai Financial's senior vice president K N Dey said that the RBI has certainly done a good job by stabilising the rupee value against the rupee. ''But there is a lot of tension in the market, nobody knows about the future trend.''

Forward premiums shot up on heavy paying pressure. The third month annualised premiums shot up to 14.30 per cent from 9.23 per cent of the previous day, the sixth month premium to 12.43 per cent from 9.08 per cent and the yearly premium to 11.55 per cent from 9.49 per cent.

Cash/spot business were conducted betwen 2.5-3.00 paise premium, while cash/tomorrow were done between 0.50-1.00 paise premium. The month-wise premiums in paise were: August 20-25 (10-13), September 75-87 (45-49), October 115-13- (76-81), November 155-170- (108-114), December 190-205 (144-149), January 225-240 (175-180), February 270-285 (206-211), March 305-320 (244-249), April 345-365 (281-287) and May 380-395 (315-322).

The RBI fixed its reference rate at Rs 42.75, which itself was 65 paise lower from the previous day's rate of Rs 43.42.

In the cross currency market, the rupee strengthened against sterling, deutsche mark and Japanese yen and quoted for sterling at Rs 69.83 (70.50), for DM at Rs 23.91 (24.17) and for yen at Rs 30.08 (30.13).

In the domestic money market, the call money interest rates also shot up due to hike in the repo rate and CRR. The rates opened at 8.25-8.50 per cent and went up to the high of 10.30 in the morning, after the RBI announcements and finally closed at 9.50-10.00 per cent against the previous close of 7.50-7.65.

In the Bombay bullion market, both silver and gold prices eased moderately. Silver 999 and raw declined by Rs 100 and Rs 90. Standard mint and 22-carat slid by Rs 20 each while ten tola gold biscuit lost Rs 700 per biscuit.

UNI