Re Strengthens On Good $ Supply

FOREX REPORT

After a continuous decline over the first couple of days this week, the spot rupee gained strength to close at 42.67-69 against the dollar. Yesterday, the Indian currency opened at 42.85-90 and appreciated to a high of 42.67.

On Tuesday the rupee breached the psychological barrier of 43 and traded at an all-time low of 43.03 against the dollar before closing at 42.85-90.

The rupee appreciated on the back of good dollar flows, exporter selling and import cancellations.

According to a dealer with a private sector bank, there was good dollar selling by a European and an American bank. Market estimates suggest that there were inflows to the tune of $70-80 million.

The possibility of rupee appreciating further is not ruled out but at 42.50 levels there would be a good deal of covering.

The Reserve Bank of India (RBI) reference rate was 42.71 as against 42.92 on Tuesday.

Yesterday, one-month premiums closed at 11.76 per cent (13 per cent), three-month at 12.01 per cent (12.91 per cent), six-month at 11.53 per cent (12.20 per cent), and one-year at 11 per cent (11.44 per cent).

Yesterday, cash tom ( in paise) was 0.75-1, cash spot 1.25-2 and tom spot 0.50-1.

Monthly premiums (in paise) closed at: 1-3 for June, 48-51 for July, 91-96 for August, 131-136 for September, 171-176 for October, 210-215 for November, 250-255 for December, 292-297 for January, 334-339 for February, 375-380 for March, 409-414 for April and 441-446 for May 1999.