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Late $ selling checks rupee gains on sanctions talk; Rs 42.53/54

The rupee, after registering initial gains on rumours that the US is going to ease the sanctions, ended about three paise lower against the US greenback in an active interbank foreign exchange market today.

Opening steady at Rs 42.51/52, the rupee moved slightly down to 42.5250/5350 level in the morning on good corporate dollar demand and remained at that level till 1400 hrs. But rumours of the US lifting the sanctions against India resulted in heavy dollar selling by corporates who feared further appreciation of the rupee.

The Indian currency rose to Rs 42.48/49 level in the afternoon.

However, State Bank of India started buying huge amount of dollars at that lower level, which pushed down the rupee to close at Rs 42.5350/5450 as against Rs 42.51/52 the previous day.

Forward premia, which moved up a bit in the morning, came down later in the afternoon when the rupee appreciated on better receiving. Near forwards premia eased by 1-2 paise while the far forwards crashed by about ten paise. The sixth-month annualised and yearly premia closed lower at 6.47 per cent and 7.25 per cent respectively.

Cash/spot and cash/tomorrow ended higher at 2.50-3.00 paise and 1.50-2.00 paise respectively. The month-wise premia in paise were: January 8-9, February 23-26, March 43-46, April 71-75, May 91-95, June 118-121, July 147-150, August 176-179, September 205-208, October 234-237, November 264-267 and December 294-297.

The rupee strengthened marginally against pound sterling and Japanese yen. It ended against pound sterling at Rs 69.85 (Rs 70.27), yen at Rs 38.03 (Rs 38.19) while it remained nearly steady against euro at Rs 49.60.

Meanwhile, the Reserve Bank of India maintained the reference for the US $ at Rs 42.52.

In the domestic money market, the call rates ruled slightly higher due to good demand and closed at 9.00-9.25 per cent.

In the Tokyo market, the dollar was buoyed by short-covering ahead of daily exchange rate price-fixing operations. But the US currency's gains were likely to be curtailed by lingering concern over financial turmoil in Brazil and US President Bill Clinton's impeachment trial in the Senate, traders said.

The euro was traded at $ 1.1707, up from $ 1.1642 in Tokyo late Thursday and also higher than its level of $ 1.1670 overnight in New York.

UNI

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