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Rupee falters after initial gains; Rs 42.27/29 vs $

The rupee, after an initial gain of five paise in the morning on the US decision to lift sanctions, ended one paise higher against the greenback on the interbank foreign exchange market today.

The Indian unit opened higher at Rs 42.25/27, further strengthened to Rs 42.24/26 in the morning on heavy dollar selling by corporates and banks and lower demand. However, the rupee gain was short-lived as heavy dollar demand at that lower level, pushed the rupee down to Rs 42.27/29 at close against Rs 42.29/30 of the previous day.

Dealers said that the impact of the lifting of the US sanctions was not felt in the market. All-round buying of dollars by banks and corporates when the US unit come to lower level, stopped the rupee's further appreciation, they added.

Forward premia were also moved down by about 2/3 paise in the absence of any paying pressure. The third, sixth month and yearly annualised premia were quoted lower at 6.03 per cent, 7.28 per cent and 7.56 per cent respectively.

Meanwhile, the Reserve Bank of India has revised the reference rate for US dollar six paise higher at Rs 42.27 against Rs 42.33 of the previous day.

Premium on cash/spot business was 0.75 -1.25 paise and cash/tomorow at 0.25-0.50 paise. The month-wise premia in paise were: November 7-9, December 26-29, January 52-55, February 79-83, March 110-114, April 141-143, May 171-175, June 199-204, July 231-134, August 258-263, September 287-292 and October 316-321.

In the overseas market, the US dollar slightly weakened against pound sterling and remained almost steady against deutsche mark and yen. The rupee rose marginally against yen and DM and declined against sterling. Sterling was quoted at Rs 70.35 (70.09), DM at Rs 25.22 (25.45) and yen at Rs 35.34 (35.98).

In the domestic money market, the call money interest rates hovered between 7.90 per cent and 8.10 per cent with matching supply and demand most part of the day before closing at 7.90-8.00 per cent.

UNI