Month-End Pressure May Drive Rupee Down

Forward premiums are likely to quote in the 11-per cent range.

Bankers said the rupee was marginally overvalued against the dollar at present, the appropriate exchange rate being citedin the region of 36.

However, the rates were not moving appreaciably owing to adequate dollar supplies.

Many exporters were booking forward for December as there is a feeling that the rupee would depreciate substantially at that point of time.

Spot rates of the dollar were quoting between Rs 35.71 and Rs 35.76 in the preceding week.

The first two days were marked by lacklustre trading, particularly with Monday being a holiday. On Wednesday, however, there was some movement in the spot rates which touched Rs 35.76 on dollar purchases by the State Bank of India. The rates later eased to Rs 35.71.On Thursday and Friday too, the rates remained steady.

However, the forward segment was relatively vibrant with the annualised rates dipping to 10.2 per cent on Friday.

They had been hovering around 10.7 per cent for the better part of the week.

The decline in rates was attributed to a large dollar sell-off by exporters.

They sold near-term dollars and booked for the far-term, after the rupee slide appeared imminent.

Internationally, the dollar weakened on the disclosure that the US deficit was subsantially higher than the expected figure. The trade deficit was around $11.8 billion, almost $3 billion higher than the expected $8.8

billion.

The dollar, therefore, lost some ground against the mark and yen but it later recovered in a small measure.