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Market turns volatile as Kargil flares up; Rs 42.98 to $

The rupee, after touching an intra-day low of Rs 43.02/04 to the US dollar, ended four paise lower at Rs 42.9750/9850 against the greenback in a volatile interbank foreign exchange market today.

Opening nearly steady at Rs 42.93/95, which was the day's high, the rupee came under pressure on heavy dollar buying by corporates and banks, especially by State Bank of India as the renewed air strikes by Pakistan and counter-attacks by India, panicked the marketmen.

The rupee touched the day's low of Rs 43.02/04 in the morning on heavy dollar demand. However, later, the demand slowed down and with scattered dollar supply, the rupee recovered its initial losses partially, and ended at Rs 42.9750/9850, as against Rs 42.9350/9400 of the previous day's close shedding four paise.

The forward market also witnessed good activity with the premia tracking the spot rupee. Premia rose initially on paying pressure.

However, they eased later on receiving and ended a bit lower from the previous day's closing level. The six-month and yearly annualised premia finished at 5.31 and 6.12 per cent respectively as compared to 5.33 and 6.17 per cent of the previous day.

Cash/spot and cash/tomorrow premia ended at 0.75-1.00 paise and 0.25-0.50 paise respectively. The month-wise premia in paise were June 10-12, July 27-29, August 47-49, September 67-69, October 87-89, November 108-110, December 128-130, January 158-160, February 184-186, March 210-212, April 234-236 and May 257-259.

Meanwhile, the Reserve Bank of India fixed the reference rate for US dollar at Rs 43.01 as against Rs 42.94 the previous session.

The rupee weakened marginally against the Japanese yen, while it remained nearly steady against pound sterling and euro. Yen finished at Rs 35.50 (35.38), sterling at Rs 69.07 (69.06) and euro at Rs 44.26 (44.28).

In the domestic money market, the call rates ruled in a narrow range of 8.00-8.20 per cent throughout the day and ended steady at 8.00-8.10 per cent.

In the Tokyo market, the US dollar sank against the yen on speculation about a rumoured call for large-scale tax cuts in Japan. The dollar bought 120.84 yen late afternoon, down 0.78 yen from late Friday in Tokyo and below its New York level of 122.22 yen late Friday. The currency ranged from 120.55 yen to 122.45 yen Monday in Tokyo.

The euro was quoted at 124.47 yen, down from 125.29 late Friday in Tokyo, on news that negotiations between Nato and Yugoslavia had collapsed.

UNI

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