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RBI intervenes to rescue rupee

Forward premiums at the interbank foreign exchange market stabilised on Friday in an otherwise volatile trading, characterised by the spot rupee drifting lower to Rs 36.30-31 on nervous short covering by corporates and client covering by banks.

The rupee opened at Rs 36.23-24 against the American greenback and fell to Rs 36.30-31 on panic buying. Intervention by the Reserve Bank of India in both spot and forward sections helped the Indian rupee to recover to Rs 36.22-23 at the fag end of trading.

"RBI was more active in the forward section on Friday even though, selling by the apex bank stabilised the forward premia, but the broad bid/ask quotes in the far forwards is indicative of the heavy demand in the market," remarked a senior forex dealer.

Bankers discounted the Southeast Asian currency turmoil spilling into the Indian market as they feel foreign investors, especially the FIIs, have a bullish perception of the Indian rupee.

"The cooling of sentiments in the forward section on Friday is indicative of slowing down of the dollar demand in the non-deliverable forward market," opined a dealer.

The NDF is a forward hedge market existing in select foreign cities and is utilised by FIIs to cover their future positions against the rupee. It is called so as the rupee is non-deliverable in the overseas market.

Cash spot ended at 2.50- 2.75 paise premium, tom spot at 2.25- 2.50 paise premium and cash tom at 0.25- 0.50 paise premium.

The forward premiums (in paise) closed at 1- 2 for October, 14-16 for November, 32-37 for December, 50-55 for January, 67-72 for February, 86-91 for March and 104-109 for April.

The six-month annualised premia closed at 5.90 per cent. The pound sterling closed at Rs 59.15, German mark at Rs 20.32 and Japanese yen at Rs 29.79 (per 100 units).

According to local forex dealers, the Tokyo and Hong Kong markets were reported stable.

Back home, the RBI fixed the reference rate at Rs 36.26 per US dollar as against Rs 36.22 on Friday.

UNI