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Rupee gains six paise on talk of lifting of sanctions; Rs 42.45/46

The Indian rupee strengthened by six paise against the greenback as the report of lifting the US sanctions, cheered the interbank foreign exchange market today.

The rupee opened steady at Rs 42.51/52 and immediately moved up to Rs 42.47/48. The market sentiment changed favourably as a result of reports of the US administration negotiating with India to lift the sanctions, and of the news that India in return, would sign the Comprehensive Test Ban Treaty. The dollar was not in much demand while banks and corporates, expecting further rupee appreciation, were selling it, dealers said. However, later in the morning, the rupee moved down slightly to 42.49/50 due to renewed dollar buying at the lower level. In the afternoon the rupee further strengthened, with better dollar offerings and lower demand, and closed at Rs 42.45/46 against Rs 42.51/52 of the previous close, gaining six paise.

Forward premiums also came down on better receiving and nominal import bookings. The 3rd month, the 6th month and annualised premia were quoted lower at 6.57 per cent, 7.47 per cent and 8.38 per cent respectively.

The RBI has revised the reference rate for the US dollar four paise lower, at Rs 42.49 against Rs 42.53 of the previous day.

Cash/spot business were conducted at 3-3.50 paise premia while cash/tomorrow were done at 2.50-3 paise premium. The monthwise premia in paise were: October 15-17, November 38-41, December 62-66, January 87-94, February 118-122, March 148-152 and April 182-187.

In the overseas market, the US dollar fell against the pound sterling, deutsche mark and Japanese yen. The rupee become a bit stronger against the sterling, the DM and the yen and was quoted at Rs 72.54 for the sterling, Rs 25.37 for the DM and Rs 31.73 for the yen.

In the domestic money market, the call money interests rates opened higher at 8.25-8.50 per cent, ruled between 8.00-8.50 throughout the day with good demand for funds in view of the holidays this week, and closed at 8.00-8.25 per cent.

UNI