Rupee Hardens, Forwards Quote Lower

The inter-bank foreign exchange market was relatively choppy yesterday with the rupee rising but surrendering the gains later.

Opening at 35.66-35.68 to a dollar, the Indian currency rose to a high of 35.64-35.66. However, it later slipped to 35.69-35.70 during the course of the days trading and closed in the same range. According to a few dealers, there was a conscious attempt on the part of some sellers to keep the rupee low. This, they feel, is because they are looking for better rates. The dollar appreciated on account of buying pressure from several nationalised and foreign banks, notably the State Bank of India. Though dollar purchases were far from heavy, it was sufficient to push up the dollar rate given the relatively thin market volumes. The sales, too, were comparatively lower.

The Reserve Bank of India, (RBI), was buying dollars at Rs 35.70, but the amount was moderate at best.

The cash-spots and forward premiums continued their downward trend. This, treasury heads attribute to the receiving pressure and the easy liquidity conditions. -Call rates are ruling between 2.5 and 3 per cent and most banks have brought down their interest rates. Hence, on expectations of easy availability of funds, the dated premiums have fallen.

The cash-tom was quoted at -.5, while the cash-spot stood at -1. The annualised forward premium fell further to 6 per cent from Thursdays figure of 6.5 per cent.