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RBI measures help rupee to recover to Rs 43.50 Vs US $

• Rs 43.50 vs $
• Rs 46.26 vs euro
• Rs 70.23 vs pound
• Rs 39.20 vs yen (100)

The Indian rupee staged a smart rally today and closed about seven paise higher against the greenback as a result of the measures announced by the Reserve Bank of India to reduce the temporary demand-supply gaps in the interbank foreign exchange market.

The rupee opened higher at Rs 43.53/56, which happened to be the day's low, further rose to Rs 43.4850/4950 in the morning after the announcement of the RBI's new measures which include the arrangement to meet fully or partially the forex requirements for crude oil import and direct payment of government debt service, as well as to sell dollars directly or indiretly in case of any temporary demand-supply gap.

The rupee closed the day at Rs 43.50/51, nearly seven paise higher from the previous close Forward premia, tracking the spot market, also fell sharply on good receivings by nationalised banks. Near forwards dropped by 4-5 paise while far forwards shed about ten paise. The six-month and yearly annualised premiums finished lower at 4.72 per cent and 4.98 per cent respectively, as compared to 5.00 per cent and 5.25 per cent of the previous day's closing levels.

The Indian unit had been showing a weakening trend, even after the end of the Kargil crisis. It had crashed by about 35 paise to the US $ in the last one month, from Rs 43.21/22 on July 20 to Rs 43.56/57 on August 20, the lowest ever closing level. This was due to several factors like shooting down of a Pakistani spy plane, selling pressure by foreign institutional investors in the capital market ahead of the election and severe criticism by the US and other countries of India's nuclear doctrine.

The new measures by the RBI would stabilise the rupee in the coming days, dealers said.

Cash/spot and cash/tomorrow premiums ended at 0.75-1.00 paise and 0.35-0.50 paise respectively. The month-wise premiums in paise were: August 2.5-3.5, September 19-20, October 35-37, November 51-53, December 67-69, January 91-92, February 105-108, March 124-126, April 143-145, May 162-164, June 181-183 and July 202-202.

The RBI has fixed the reference rate for US dollar at Rs 43.52 as against Rs 43.55 of the previous day.

The rupee appreciated against pound sterling and euro while it weakened against the Japanese yen. Rupee finished against sterling at Rs 70.23 (70.51), euro at Rs 46.26 (46.50) and yen at Rs 39.20 (39.06).

At the interbank call money market, the call rates opened a bit higher at 8.75-9.00 per cent, ruled in the range of 8.25-9.00 per cent level and finaly closed at 8.25-8.50 per cent, marginally lower from 8.50 per cent of the previous day.

UNI

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