MUMBAI, March 16: AB Vajpayee's appointment as prime minister strengthened the forward rupee on Monday. "It reflects the initial euphoria over the fact that political uncertainty is coming to an end," a chief dealer in a private sector bank said.Forward premiums fell by 10-15 paise across the board on signs of a stable government emerging at the centre. Six-month forwards closed stronger at 10.45 per cent - up from the previous close of 10.90 per cent. One-month forwards closed at 11 per cent, which moved in tandem with the call rates in the money market. One-year forwards closed at 10.35 per cent.
However, the spot rupee remained lukewarm. "The forwards are the actual indication of things to come," a dealer explained. The spot rupee remained rangebound on Monday and closed at 39.55 vis-a-vis the dollar -- weaker than the previous close of 39.50. Opening at 39.49/50, the rupee gained slightly to 39.47 on some selling pressure.
But late buying pressure from the State Bank of India (SBI) saw the rupeeweaken dollars, most banks which were short on dollars began buying dollars which saw the rupee weaken to 39.53," a dealer in a private sector bank said. Subsequently, the rupee closed at 39.53/55.
Dealers said that the forex market is awaiting policy measures from the new government which will also give a direction to the rupee. "Till the budget for the new fiscal is presented, the rupee is likely to remain rangebound," a dealer in a foreign bank said. "But there is no panic in the market. Corporates have adopted the strategy of wait and watch. But with the political scenario clearing, stability is likely to return to the forex market," a forex analyst said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
