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RBI announces new steps to calm rupee; forex market calm

The Reserve Bank of India today announced new measures to calm the troubled waters of the forex market.

Banks will charge a minimum interest of 20 per cent per annum on overdue export bills, which are not realised within the due date, taking into account usuance and transit period, as specified by the Foreign Exchange Dealers Association of India.

The higher rate of interest on overdue export bills will apply from the date of advance.

However, in case of demand and short-term usuance bills, this interest rate will not be applicable, where the total period of credit including the overdue period is less than one month from the date of bill/negotiation.

The RBI said that it will not grant extension of time limit for realisation of export proceeds, unless there is a strong case for extension.

The apex bank has decided to introduce an interest rate surcharge of 15 per cent of the lending rate (excluding interest tax) on bank credit for imports. This surcharge, will however, not be applicable for bank credit to export- related imports, namely, export packing credit to meet the cost of imported inputs, import of capital goods under the export promotion capital goods, imports by export-oriented units and units in export processing zones and imports of inputs under advance licences.

Similarly, bulk imports with regard to crude oil, petroleum products, fertilisers, edible oils and other essential commodities will be exempt from the interest surcharge.

Meanwhile, the Reserve Bank of India's efforts of keeping the rupee stable and Governor Dr Bimal Jalan's statement on Monday that the current level is "reasonable," seemed to bear fruit today, as the rupee was traded in a narrow range, showing lower spreads at the interbank foreign exchange market.

The rupee opened at Rs 39.39-42 against the greenback. On demand from banks and corporates slide the Indian currency to Rs 39.48-50 around midsession. The rupee later recovered, climbing to Rs 39.37 and finally closed at Rs 39.38-41.

According to dealers, the RBI stayed away from the spot section, while selling around US dollar 70 million in the forwards, notably for January and February 1998.

The forwards eased moderately as a result of RBI's intervention, dealers said.

"The market witnessed good amount of import booking at Rs 39.40 levels and off-loading by exporters at Rs 39.48," a dealer with a nationalised bank informed.

Cash/spot closed at 1.75-2 paise premium, cash/tom at 1-1.25 paise and tom/spot at 0.75-1 paisa.

Covering cost for the next 2- 3 days shot up today on account of higher call money rates.

Overnight interest rates opened at 9-9.25 per cent and immediately moved up to 10 per cent and finally settled higher at 11.5- 12 per cent at the fag end of the day.

The monthly premiums (in paise) were 16-17 for December, 43-45 for January, 80-84 for February, 116-118 for March, 150-153 for April, 170-173 for May and 192-195 for June. Six-month annualised premia ended at 9.44 per cent.

The dollar plummeted against yen, while strengthening against pound and mark in overseas trading, dealers informed. Elsewhere, the RBI fixed the reference rate at Rs 39.46 as against the previous fix of Rs 39.44.

The pound sterling opened at Rs 64.49 and closed at Rs 65.08. The mark and yen (per 100 units) closed at Rs 22.23 and Rs 31.19 respectively.

UNI