Apex Bank Intervention Checks Re

FOREX REPORT

Intervention in the forex market by the Reserve bank of India (RBI) stabilised the spot rupee to Rs 35.7150 levels yesterday. Spot rupee opened stronger against the dollar at Rs 35.72 / 73 levels and blipped to Rs 35.6950 during early trading hours.

The RBI intervened when the rupee touched below Rs 35.70 levels, which cushioned the dollar from falling. Presence of the RBI thwarted speculative moves of operators. The rupee immediately moved down to Rs 35.7150 /7250 levels and closed at around Rs 35.7150, said a source.

Absence of the RBI for a long time strengthened the rupee by around ten paise in the past ten days as several banks went long on dollar. The RBI did not make dollar purchases since July 8 and this coupled with good supply and lacklustre demand form importers strengthened the rupee to near Rs 35.70 levels.

The RBI made purchases of around $50 to $60 million in spot dollar and around $150 million in the forwards. It is difficult to gauge the exact quantum of RBI purchases, however, the movement of the currency indicates that it made purchases of around $ 250 to $300 million in both spot and forwards, said a dealer.

There was not much movement in forwards, the premia towards closing time in paise: 5-6 for July, 13-14 August, 23-25 September, 36-37 for October, 47-49 for November, 60-62 December, 70-72 for January and 80-82 paise for February.

The six month annualised premia was at 3.67 per cent and the six month Libor was at 5.81 per cent.