The rupee opened at 42.44/45 per dollar against Tuesday's 42.44/45.

The forward premiums across all maturities shot up by 10-15 paise as corporates were seen covering near and far-end forwards. The six-month annualised premium closed at 8 per cent (7.2 per cent), three-month at 7.9 per cent (6.9 per cent), and one-month at 7.33 per cent (6.2 premium). Forex dealers predicted a fresh round of rupee fall.

"The central bank may not be averse to one round of weakness in the rupee. The case for a weaker rupee is building up,"said ANZ Grindlays head of forex trading Sunil Sharma. The rupee has been trading in a 42.40-42.60 band for over three months.

Forex dealers cited concern over the survey's comment that the rupee should be monitored to ensure export competitiveness following devaluations by countries competing with India in global trade.

The survey dubbed the third successive year of export sluggishness in fiscal 1999 a "cause for concern", and said that sustained rapid growth in exports remained the most crucial ingredient for ensuring long-term external viability.

Political uncertainty caused the rupee to fall by nearly five paise to 42.49/50 in morning trade, after Prime Minister Atal Bihari Vajpayee said he would quit after it appeared that his Government may not be able to get parliamentary support for imposition of Central rule in Bihar.

A forex dealer from ANZ Grindlays Bank said: "Most corporates are not holding on to long positions. Exporters are absent from the market, while importers are covering one-,three- and six-month forwards as they expect it a good level to cover."

According to forex dealers, after the Economic Survey report was made public, panic buying by banks on behalf of corporates pushed the rupee down to 42.54/55 against the dollar from the opening level of 42.435/445. "State Bank of India reportedly bought dollars, which triggered a fall in the rupee against the greenback," said a forex dealer from a foreign bank.

Forward premiums across all maturities shot up sharply by 10-15 paise owing to high paying pressure after the rupee weakened to an intra-day low of 42.57/58 against the dollar. "Hectic covering by importers saw a sharp rise in the forward premium," dealers said.