MUMBAI, February 23: The Reserve Bank of India on Monday intervened in the spot market as the rupee fell below 39 again the dollar. The rupee weakened to 39.22/26 after opening at 38.96/98, on a day marked by heavy buying from State Bank of India. This is the first instance of the rupee sliding below 39 after the Reserve Bank announced a string of tight money measures on January 16.Dealers said that the central bank pumped in $25-30 million to prop up the rupee.
The rupee touched a low of 39.20/22 before the apex bank intervened to sell dollars which saw the rupee gain some ground to trade at 39.12. However, the rupee once again weakened to close at 38.22/26.
Six-month forwards fell to 306/308 paise after touching a high of 316/318 paise. Six-month annualised premiums closed at 16.8 per cent, up by 80 basis points over Friday's close of 16 per cent. "The SBI bought dollars in large amounts which saw other banks also buying dollars to sell it," UTI Bank deputy general manager P Mukherjeesaid.
According to dealers, corporates are covering their exposures which is leading to the weakening of the rupee. "Indian Oil could be one of the major buyers to meet its month end requirements," a dealer in a foreign bank said. "I think this is the last time we are seeing the rupee trading at 38 level. The rupee should settle between 39 and 39.20," ICICI Bank senior vice-president (treasury) PH Ravikumar said. "The rupee should strengthen after month-end pressures ease," a dealer in a foreign bank said. In the forward market, SBI -- in an unusual move -- received dollars. "They did it on behalf of the Reserve Bank as forward premiums were rising. After their paying in the market, premiums came down especially in the far forwards," a treasury head in a foreign bank said. State Bank generally pays in the forward market when it buys dollars in the spot market.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
