COMMENTARY
INTERVIEW
SPECIALS
CHAT
ARCHIVES

RBI intervenes to prop up dollar

In a rare case in recent days, the Reserve Bank of India on Friday intervened in the interbank foreign exchange market to support the US greenback when it touched the Rs 36.27 level.

The rupee opened higher at Rs 36.31-34 per dollar against Thursday's close of Rs 36.33-34. The central bank intervened in the market as soon as the rupee started quoting at Rs 36.27 level on heavy dollar selling by financial institutions, dealers said, and added that the apex bank had made small purchases at the rate of Rs 36.30 per dollar.

''Now the RBI does not want the rupee to firm up beyond Rs 36.30,'' said a forex dealer at the leading nationalised bank.

The greenback was in good demand on Friday due to corporate covering. The banks were busy in covering import remittances on behalf of diamond traders corporation, dealers added.

Commenting on the day's trading, Anand Nesarikar, forex advisor at the Lloyds Finance, said that ''the central bank want's to educate the market forces in the forex market as well as curb volatility in the market.''

Meanwhile, the forward dollar premia also eased further against their previous levels.

Otherwise, the Reserve Bank of India fixed its reference rate at Rs 36.40 as against Thursday's rate of Rs 36.37 per dollar.

The rupee has lost nearly 65 paise against the US greenback during the month period (August 19-September 19). The Reserve Bank arrested the fall of the Indian rupee when it tried to cross the Rs 36.73. The RBI has repeatedly intervened in the market during the past fortnight to stabilise the market.

Dealers said importers had covered hurriedly during these period in fearing a further fall in the rupee value against the dollar. Now most of the import remittances are over, therefore the rupee sees a continuing appreciation against the dollar, forcing the central bank to support the dollar, they added.

''The market definitely will witness a steady trend following Friday's RBI indications,'' the dealers said confidently.

The rupee was traded between Rs 58.37 and Rs 58.35 against the pound sterling. Nominal activity was witnessed in the overseas market, dealers said.

Cash to spot dollar was traded between 2.5-3 paise premium.

Forward premium in paise were 5-7 for September, 24-25 for October, 41-43 for November, 60-63 for December, 80-83 for January, 94-96 for February, 112-115 for March, and 133-36 for April.

UNI