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Rupee gains nine paise as banks, corporates sell $; Rs 42.36/38

The Indian rupee strengthened by about nine paise against the greenback on speculative dollar selling by banks and corporates on the interbank foreign exchange market today.

The rupee opened steady at Rs 42.45/46, ruled almost in the same range till noon, with matching dollar demand and supply. It started strengthening from the mid-session and shot up to the day's high of 42.26/28 on heavy unloading of dollar by corporates and banks.

Dealers found encouragement in news reports that the International Monetary Fund praising India for maintaining growth despite great economic downturn in east Asia, Russia and Japan, that the group of seven industrial countries were moving more aggressively to jump-start the world economy, and that Finance Minister Yashwant Sinha made a statement in Washington demanding $ 3 billion loan from the World Bank. There were also positive indications of lifting of the sanctions.

However, with fresh dollar demand at the lower levels, the rupee slid to 42.43/45 in the afternoon before closing at Rs 42.36/38 level against the previous close of Rs 42.45/46, appreciating by about nine paise.

Major market player State Bank of India bought dollars at lower levels, dealers said.

The forward premia, which ruled lower at mid session on good receiving, later moved up towards close on some paying pressure. The third month, sixth month and yearly premia were quoted around 7.18 per cent, 7.89 per cent and 8.57 per cent respectively.

Meanwhile, the Reserve Bank of India reference rate was quoted five paise lower at Rs 42.44 against Rs 42.49 of the previous day. Cash/spot business were conducted at 0.50-0.75 paise premium while cash/tomorrow was done at 0.25-0.50 paise premium.

The month-wise premia in paise were: October 14-17, November 39-42, December 62-65, January 90-95, February 120-125, March 151-156, April 185-190, May 220-225 and June 252-257.

The domestic money market, the call rates, which opened slightly higher at 8.10-8.25 per cent, ruled in the same range most part of the day and eased to 7.75-8.00 per cent at close.

In the cross currency market, the rupee strengthened against pound sterling and Japanese yen while it slightly weakened against deutsche mark and was quoted for sterling at Rs 71.83 (72.54), for DM at Rs 25.87(25.37) and for yen at Rs 31.39 (31.73).

UNI