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Holidays-eve buying weakens rupee; Rs 42.51/52

The rupee weakened by two paise against the greenback due to month-end dollar demand, on the interbank foreign exchange (forex) market today.

Opening higher at Rs 42.53/54, the rupee further slid to the day's low of Rs 42./54/55 in the mid-morning and ruled almost in the same range till noon, on heavy dollar demand by corporates and banks to cover up their positions in view of the month-end and forthcoming holidays.

However in the afternoon, the Indian unit strengthened and partially recovered its morning losses on better dollar sales and lower demand. It finally closed at Rs 42.51/52 against Friday's close of Rs 42.49/50, losing its value by two paise.

State Bank of India was not active in the market and did only nominal dollar buying, dealers said.

However, forward premia came down a bit on better receiving and lower import booking in forwards, dealers said. The third month, sixth month and yearly premiums were quoted slightly lower at 6.82 per cent,(7.53), 7.69 per cent (8.01) and 8.54 per cent (8.76) respectively.

The Reserve Bank of India has revised the reference rate for US dollar two paise higher at Rs 42.53 against Rs 42.51 of Friday.

Cash/spot businesses were conducted between 3.5-4 paise premium, while cash/tomorrow were done at 3-3.50 paise premium. The month-wise premia in paise were: October 16-19, November 40-44, December 65-70, January 94-98, February 123-128, March 154-159, April 187-193, May 220-225, June 253-258, July 286-291 and August 320-325.

In the overseas market, the US dollar weakened slightly against pound sterling, while strengthened deutsche mark and Japanese yen. The rupee was quoted at Rs 72.35 for sterling, Rs 25.26 for DM and Rs 31.22 for yen.

In the domestic money market, the call money interest rates opened higher at 8-8.25 per cent, ruled in the same range most part of the day on good demand and lower supply, later eased to 7.00-7.50 per cent at close.

UNI