GOA, August 17: Reserve Bank deputy governor YV Reddy foresaw a natural correction in the rupee spot rate once oil companies begin repaying short-term loans they borrowed to cover feedstock purchases, while waiting for the authorities to reimburse them $4.3 billion for selling petroleum products at subsidised rates.

The verdict that the rupee is overvalued is unlikely to shake a stubbornly firm spot rate, but there was a broad hint to corporates and importers to start covering forward positions, foreign exchange dealers said. The rupee has been stable between 35.70/85 for the pastyear. It closed on Thursday at 35.7125/75 to the dollar. Only persistent intervention by the central bank has stopped the runaway rupee, and the country's forex reserves have risen to an all-time high of $30 billion.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.