MUMBAI, Mar 3: The rupee strengthened on Tuesday after the political scenario became clearer with the Bharatiya Janata Party and its allies set to stake their claim to form a government at the centre.The rupee gained to close at 39.44/48, up 3/7 paise over its previous close of 39.51/53, but not before touching a low of 39.60 on SBI buying. "There were stray deals at 39.60," dealer with a private bank said.
"During the early trades, banks and corporates were nervous but this tapered off during the day as the political scenario cleared," chief dealer with a private sector bank said.
"The banks which were taking positions in dollars have stopped doing so and are instead selling the same," dealer with a foreign bank said.
Dealers said, as the rupee touched 39.60, the SBI came and sold dollars. Other banks took cue and sold their dollar positions which saw the rupee gaining considerably to touch 39.44/48.
Meanwhile, the forward rupee gained on Tuesday in line with the gain posted by the spot rupeevis-a-vis the dollar. Six-month forward rupee gained 10 paise, while one-month forward rupee gained 9 paise to close at 30 paise.
While six-month (annualised) closed at 13.65 per cent -- down from Monday's level of 14.25 per cent, one-month premia eased to 12 per cent from 13 per cent on Monday.
"With spot rupee gaining the forward premia had to ease," dealer with a private bank said. In the spot market, the rupee gained after SBI sold dollars.
"Initially, the forwards weakened but later on the gain in the spot market firmed it up," dealer with a private bank said.
On Monday, forwards went up after the market turned nervous after initial trends showed a hung parliament.
The spot rupee also weakened to cross the 39.50 barrier on SBI buying.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
