Rupee Drops To 39.20/23

The rupee yesterday slipped to 39.25-28 versus the dollar before closing at 39.20-23. The rupee had last closed at 39.00-10 on January 18. Forex dealers said the market sentiment had changed and some corporates were covering for March-end since they could cover at an less than 40.

The political uncertainty and the contradictory statements of finance secretary Montek Singh Ahluwalia and RBI deputy governor Y V Reddy on a limit on RBI forward dollar sales also moved the market. The market is already long on premiums.

Forward premiums shot up before declining at close. The one-month premium closed at 13.69% (against 12.54% on Friday), three-month at 16.82% (16.75%), six-month at 13.51% (15.95%), and one-year at 14.08% (14.28% on Friday).