Re Unchanged After Intra-Day Swings, Forward Soft

The rupee hit a new intra-day low of 48.7550/7650 against the greenback on the back of buying interest by all banks. It opened higher at 48.7200/7400 against the previous close of 48.6800/6900 and closed almost unchanged at Wednesday's level.

Since the beginning of this week, the rupee has hit an intra-day low of 48.74/75 against the dollar a couple of times.

"There was good two way interest in the forex market. After *opening at the 48.72/74 level to the dollar good buying saw it weaken to 48.7550/7650. At this level there was some selling and the rupee came off its life-time lows to end at 48.68/69," a foreign exchange dealer with a private sector bank said.

 

According to the dealer a major telecom service provider was buying in a big way in the market in order to meet its overseas commitments.

Banks continued to go long on the dollar, thereby giving credence to the general perception that the Indian unit is over valued and needed a downward correction to boost exports.

"The weakening of the rupee against the dollar apparently has the blessings of the central bank. Robust foreign exchange reserves and low inflation are the two comforting factors which will see to it that the rupee does not slide drastically to the dollar," a dealer with a public sector bank said.

"When compared to the yen, which has weakened from 115 levels in November 2001 to 135 levels to a dollar, the rupee's depreciation is very minuscule. Moreover, the depreciation of the rupee will render our exports more competitive," the dealer explained.

At its lowest point, the rupee lost nearly 0.5 percent in the past four days and one percent since January.

The six-month forward premium today softened to 5.52 per cent from its 5.60 per cent level yesterday.

The rupee is expected move tomorrow in the 46.68-48.72 range to a dollar and the forward premium will continue to see a softer bias.