Re Rallies To Close At 35.87, Forwards Steady

The rupee rallied against the dollar in the face of good corporate demand closing at 35.875-885 in the inter-bank forex market yesterday. The forward premiums held steady at 6.8 per cent in a dull market.

The spot market witnessed active buying by corporates as well as short covering by banks. The rupee opened at 35.87-88, but soon rose to the days high of 35.895-90 before creeping back to the close levels. Neither the Reserve Bank of India nor the State Bank of India were noticed actively trading. The RBI reference rate for the dollar was 35.87.

The cash-tom was .25/1 paise, the tom-spot was .25/.5 paise, and the cash-spot was .5/1.5 paise. The forwards market was rife with expectations of the RBI coming in to sell spot August. However, this did not happen. However, a large financial institution was in the market purchasing spot August.

The monthly premiums in paise were 4-7 for February, 23-26 for March, 47-50 for April, 67-70 for May, 88-91 for June, 110-113 for July, and 130-133 for August.

On the cross currency front, the dollar continued to strengthen against the other currencies. Concern is being expressed in Japan about the weakening yen. The rupee, slipping marginally against the dollar, weakened against the pound to 58.76, strengthened against the mark to 21.44, and weakened against the yen to 29.17.