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Rupee falls by 5 paise, forward premia rise

The far-forward premiums initially went up sharply by 20 to 25 paise for one year due to good renewed corporate dollar demand while the Indian currency dipped to a low of 5 paise over Wednesday's close of Rs 36.185-1950 in an active interbank foreign exchange market on Thursday.

The rupee, after an initial downtrend, dipped further to Rs 36.23-24 levels following active dollar buying from the State Bank of India coupled with renewed corporate demand, and finally settled down at the same levels towards the fag end.

Meanwhile, the far forwards initially went up by about 20 to 25 paise for one year and closed lower than the openings levels but higher by 10 paise over Wednesday's closing due to heavy paying pressure, which witnessed good volatility in the forwards section.

According to leading forex dealers, on one hand the forward premia went up sharply while on the other hand the Indian rupee lost by 5 paise moving with in a wide range of Rs 36.195 to Rs 36.235/245 levels following good dollar demand from the SBI and the corporates.

They said that actually the forward premia's were expected to crash due to the credit policy that indicates a cut two per cent in the cash reserve ratio but as there was enough profit booking and shirt covering the premiums went up gradually.

The six-month premia for Thursday was quoted for 6 per cent. The premia for October was 2-5 paise, November 16-19, December 35-40, January 56-61, February 73-78, March 93-98, April 113-118 and May 129-134 paise premium respectively.

In the overseas market, the US dollar was reported bullish against the yen due to a fall in the Hong Kong stock market while it weakened against the mark. The pound sterling also dipped lower against the US currency, a dealer from the foreign bank said.

Elsewhere, the Reserve Bank of India fixed the reference rate at Rs 36.22 per dollar over Wednesdays fix of Rs 36.20.

UNI