Dealers indicated that 41.20 is the new resistance level for the rupee. "If this is crossed, the rupee could be seen testing 41.40 level. Corporates seem to be comfortable with the present exchange rate and we do not expect them to cover till the 41.20 mark is breached," said a dealer with a private bank.

The Indian unit opened at 41.05 and dipped initially to 41.10/13 on a spate of interbank buying in the morning, on anticipation of corporate demand. The rupee stabilised against the dollar in mid-morning trade as nerves cooled after early morning jitters.

Trades were thin in the inter-bank spot market and corporate demand appeared to have petered off. Most of the trades were struck in the 41.10-41.15 band. The dollar's high forthe day came at 41.17 while its low was at 41.09.

The forward premiums, in contrast, eased with the six-month forward cover (annualised) ending at 9.13 per cent as against its previous close at 9.31 per cent. The six-month annualised forward cover ended at 9.13 per cent.

"There was not much covering today...most of the corporates appear to have done so on Monday," dealers said.