Dollar selling by State Bank of India two minutes before the official close of the market at 4 p m saw the rupee appreciate to close at 42.26-29 after having traded at an all-time low of 42.44 yesterday.
The six-month premium closed lower at 9.66% (10.03% on Tuesday), and the one-year at 9.59% (10.06%). In the money market, call rates shot up to 8.75% on account of an increase in demand for funds. The weighted average rate of Securities Trading Corporation of India was higher at 7.59%, against 6.32 % on Tuesday.
The rupee had slipped 45 paise on Tuesday to close at 42.22-25 after SBI ,which had capped the rupee at 41.80 since the beginning of June, refrained from supporting it. Yesterday, the rupee opened at 42.25-29 before sliding to an all-time low of 42.44 in early morning trade.
SBI returned to the market as a seller and fed the market greenbacks at 42.40 - 42.32.
The steady decline in the value of the rupee is also reflected the by Reserve Bank's reference rate, which was 42.33 per dollar yesterday, against 42.15 on Tuesday and 41.80 on Monday.
According to forex consultants, corporates have been covering aggressively short term while exporters are holding back. The pressure is building up because of the fact that there are hardly any inflows while foreign institutional investors are liquidating their investments in the stock market and repatriating the proceeds. Cumulative net investment by FIIs has declined from $ 9.03 billion at the end of May to $ 8.9 billion by June 5.
