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Rupee recovers after early slump due to political drama; Rs 42.85 vs $

The rupee, after some initial setback on uncertain political situation, ended two paise lower against the US greenback at an active inter bank foreign exchange market today.

Opening sharply lower at Rs 42.97/98 from its previous close of Rs 42.81/85, the rupee remained at that lower level for quite some time in the morning, as the market witnessed heavy dollar buying due to the political crisis at the Centre.

However, fresh corporate dollar off-loading at the higher level, helped the rupee to recover almost all the morning losses and closed at Rs 42.83/85, down two paise from its previous close.

State Bank of India has not actively participated in the market, dealers said, adding that the Indian currency recovered its initial loss due to heavy greenback selling by exporters at the morning's higher levels.

The rupee may continue to witness marginal depreciation in the coming few days, but no major fluctuation is expected till the election, as the caretaker government would not take any major policy decision, R K Amin, chief forex dealer of the Development Credit Bank commented.

Forward premia, which opened higher tracking the spot rupee, later drifted lower and ended marginally lower on better receiving.

Near forwards came down by 2-3 paise lower, while far-forwards eased 4-5 paise. The six-month annualised premium and yearly finished a bit lower at 6.52 per cent and 7.12 per cent respectively.

Cash/spot and cash/tomorrow ended at 1.50-2.00 paise and 1.00-1.25 paise premium respectively. The month-wise premia in paise were: May 19-20, June 40-41, July 61-63, August 84-87, September 111-114, October 139-141, November 167-169, December 195-197, January 223-225, February 248-250, March 274-277 and April 302-305.

Meanwhile, the Reserve Bank of India has revised the reference rate for US dollar by 21 paise at Rs 42.95 as against Rs 42.74 of the previous day.

In the cross-currency market, the rupee remained nearly nearly steady against pound sterling and euro while it weakened a bit against the Japanese yen. Sterling ended at Rs 69.09, euro at Rs 45.45 and yen at Rs 35.99.

In the domestic money market, the call rates ruled between 8.25-9.00 per cent during the day before closing steady at 8.25-8.50 per cent.

UNI

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