Re Slips Afresh On Reer Band Talks

FOREX REPORT

The rupee slipped sharply to 38.85 in early morning trade, following media reports on an intervention band around a real effective exchange rate (REER) of 38.4, which RBI denied. Rupee finally closed at 38.56-61 after RBI intervention.

Premiums on the forward dollar also sharpened and the six-month closed at 6.58 per cent and the one-year at 6.5 per cent.

Spot rupee opened at 38.70-80 amidst fears that the apex bank would allow a further depreciation of the rupee within five per cent of the present rate of 38.4, according to media reports. However, RBI denied the reports and intervened in the market by selling spot dollars. The Indian currency temporarily recovered to 38.40-45, corporate play right through the day kept it under pressure and it finally closed at 38.56-61.

There was considerable pressure in the forward market, too, as corproates booked for various maturities. Hence premiums moved up by about 10 paise for May (six-months) and 18 paise for November (12-months).

Monthly premiums (in paise) closed at :- December - 21-22; January - 43-44; February - 64-65; March - 81-87; April - 105-107; May - 125-127; June - 144-146; July - 165-168; August - 186-188; September - 207-211; October - 228-231; and, November - 248-251.

In the crosses, rupee closed at 64.78 against the pound, 21.91 against the mark, and 30.27 per 100 yen.