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Rupee nosedives, but recovers

The Indian rupee on Tuesday fell to 39.92/94 against the American greenback, coming perilously close to the historic low, in a volatile and choppy trading session.

It opened at 39.83/85. Panicky buying by corporates and nervous client-covering by banks pushed the Indian unit to Rs 39.86/90. Economic chaos in the South-East Asian region aided the downfall, and saw it declining further to 39.92/94.

The State Bank of India was a prominent player in the trading. SBI's selling at the Rs 39.86/90 level in the late afternoon helped the Indian unit gain some ground. It ended at Rs 39.87/89, showing a net loss of 5 paise.

The Reserve Bank of India intervened in the forwards, selling for the months of June and July.

Cash/tom closed at 2-2.50 paise premium. Cash/tom and tom/spot ended at 1-1.25 paise.

The monthly forwards (in paise) were 27-28 for January, 71-73 for February, 113-116 for March, 148-150 for April, 170-173 for May, 194-197 for June and 218-222 for July.

The six-month annualised premia closed at 10.5 per cent.

Overseas trading was volatile with the mark and yen gaining smartly against the dollar. In the local market, the pound closed at Rs 65.12, yen at Rs 30.24 and mark at Rs 21.45.

Elsewhere, the RBI fixed the reference rate at Rs 39.89 per US dollar.

UNI