Re Holds Ground, Forwards Slip Further

The rupee remained firm against the dollar yesterday, closing at Rs 35.80-Rs 35.81 in the inter-bank foreign exchange market. The six-monthly annualised forward premium slumped further to close at 7.2 per cent.

The spot market was relatively dull with the rupee moving in the narrow range of 3 paise. The reason offered by most dealers for the stable spot rate was a lack of demand for the American currency.

The State Bank was in the market buying the American currency, but its volume or purchase was not substantial enough to create an impact on the dollar price. The supply of the dollar, on the other hand, remained good.

By contrast, the forward market continued to witness plenty of action with the Reserve Bank of India carrying on its buy-sell swap operations. The apex bank was buying forwards for December and selling for June. The downward pressure on the far term forward premiums continued, particularly for June, which slipped by 5 paise to 148-150.

The RBI is in the process of squaring up its $1-billion forward contract liabilities which were to mature in December and January.

The monthly premiums were 8-9 paise for December, 30-32 paise for January, 51-53 paise for February, 76-79 paise for March, 105-107 paise for April, 126-129 paise for May, and 148-150 paise for June.