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Dollar unwinding pushes rupee up nine paise; Rs 42.40/42

The rupee strengthened by nine paise against the US greenback at the interbank foreign exchange market due to heavy unwinding of dollars by banks and corporates on positive statements by finance minister in Parliament today.

Finance minister Yashwant Sinha informed members in Parliament that the rupee has shown reasonable stability from the first half of July and the government's efforts at attracting foreign funds to the country have changed the market sentiment. Dealers said it has resulted in heavy dollar selling by the corporates and banks who were awaiting rupee's further fall, thus pushing up the rupee value, and pulling down the demand for dollars.

Opening steady at Rs 42.49/51, the Indian unit moved only upwards, on continued dollar selling and moderate demand, finally closing at 42.40/42 against the previous close of Rs 42.50/51.

Forward premiums also came down a bit on better receiving and very nominal import booking. The sixth-month and annualised premiums were quoted lower at 7.28 per cent (7.56) and 8.31 per cent (8.50) respectively.

Major market player State Bank of India has done nominal two-way business, dealers said.

Near forward premiums came down by about 4 paise while far forwards were down by 8 paise. Cash/spot businesses were conducted between 0.50-0.75 paise and cash/tom was done between level to 0.25 paise.

The month-wise premiums in paise were: July 1-2, August 18-21, September 41-44, October 71-74, November 101-105, December 130-134, January 161-165, February 190-194 and March 223-227.

In the overseas market, the pound sterling and deutsche mark remained almost steady against the US dollar, while the Japanese yen weakened slightly. The rupee strengthened against sterling, dm and yen and was quoted at Rs 69.88 for sterling, Rs 23.73 for dm and Rs 30.33 for yen.

The Reserve Bank of India fixed the reference rate for US dollar four paise higher at Rs 42.47 against Rs 42.51 the previous day.

UNI