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Rupee slide continues

The rupee, after touching a low of 42.41/42 in intra day trading, depreciated by about seven paise against the American greenback, while the forward premiums shot up by around 20 paise on the interbank foreign exchange market.

The rupee opened lower at 42.24/28 level, continued its downward movement and touched the day's low of 42.41/42 on panic dollar demand by importers and shortcovering by banks to square their open positions.

The Reserve Bank of India's decision to reduce the repos rate to five per cent didn't affect market sentiments, a dealer said. Fears of a further fall in the rupee's value resulted in heavy demand for the dollar.

Forward premiums shot up by 20 paise on heavy merchant booking by importers, who expected the depriciation in the value of the Indian currency to continue in the near future. The RBI's instructions to banks against arbitrage between the money and forex markets is one reason for the high forward premium rate, dealers informed -- since there is no arbitrage, the heavy demand for the forward dollars naturally pushes up premium rates.

Marketmen said that either the apex bank should intervene in the market or exporters should sell their dollar receipts to stabilise the premium rates.

The six-month annualised premium and yearly premiums were quoted higher at 12.47 per cent and 11.22 per cent as against 10.80 per cent and 10.5 per cent on Monday.

Cash/spot business was conducted between 1-1.50 paise premium, while the cash/tom was done at 0.50- 0.75 paise premium.

The monthwise premiums in paise with the previous premium in bracket, were June 17-22 paise (18-20), July 68/73 paise (60-63), August 108-113 paise (100-103), September 150-153 paise (138-142), October 188-193 paise (172-176), November 228-233 paise (205-209) and December 265-270 paise (244-249).

The dollar weakened slightly against the pound sterling, deutsche mark and Japanese yen. The pound sterling was quoted at Rs 69.58, dm at Rs 23.49 and yen at Rs 29.22.

The RBI, meanwhile, has fixed the reference rate at Rs 42.37 per US dollars.

UNI