Re Slides To 35.72, Forwards A Notch Lower

While the demand for spot dollars increased, that for the forward dollar fell. According to dealers, the spot dollar opened between Rs 35.65 and Rs 35.66 but shot up to Rs 35.72 on sustained demand for the American currency. The rupee, however, staged a mild rally, closing higher in the range of 35.69 and 35.71.

Dealers said the State Bank of India (SBI) was in the market. It was reportedly buying dollars in a big way all through the day, thereby pushing the rupee lower than where it was quoting last week and early this week. The SBI's dollar purchases were primarily responsible for the large movement in rates.

Forward premiums were quoting marginally lower than they were last week largely on account of the slackening demand for forward dollars.

The monthly premium rates, too, were a notch lower than they were at the beginning of this week. The rates were at 2.5/4 paise for August, 29/31 paise for September, 60/62 paise for October, 91/94 paise for November, 125/128 paise for December, 166/169 paise for January and 197/200 paise for February-end. The annualised rate was, therefore, computed at 11 per cent. They had shot up to 12.10 per cent on Wednesday after there was a large roll-over of FCNR accounts by banks.

Internationally, the dollar rallied against the mark and the yen but declined when there was not much support. It rallied in the wake of a 30-basis point cut in interest rates on the mark by the Buba, 20 basis points more than expected by the market. The greenback, however, could not keep up the momentum going and finally declined against the mark.