Rupee Declines Further Against Greenback

FOREX REPORT

The rupee fell to 35.96/98 against the dollar in late morning trade yesterday, dealers said. The Indian curency opened the day at 35.95/96 against the American currency. One dealer said that business was conducted at 35.97.

Dealers attributed the rupees fall to hectic dollar buying by a Calcutta bank. This banks dollar buying had pushed down the Indian currency to 35.94/96 on Thursday from 35.89/90 opening.

Many dealers said the bank could be complementing the Reserve Bank of India (RBI)s efforts to buy up greenback ahead of Saturdays redemption of India Development Bonds (IDBs). The RBI resumed dollar buying in the swap market yesterday, mopping up the US currency ahead of Saturdays redemption of IDBs, dealers said.

They are buying spot August and September (dollars), said a dealer at a private bank. He said forward premium reacted mildly, falling by one to two paise.

The central bank has been buying dollars in swap deals since last week. Dealers said RBIs objective was to beef up dollar reserves to replenish for the expected drain in reserves at Saturdays bond redemption.

Dealers said the redemption may see an outflow of about $1.0 billion in foreign exchange.