rediff.com: Rupee weakens to 44.43 per $ intra-day -- May 29, 2000

The Indian rupee firmed up smartly to close at 44.29 to the US dollar after having slipped to lows of 44.48 during intra-day trade on Monday.

The Indian rupee had traded in a weaker range in Monday afternoon deals amid persistent light dollar purchases by banks and corporates.

Purchases by foreign funds through custodian banks was also adding to the dollar demand, dealers said.

The rupee was quoted at 44.47/48 per dollar at 2:35 p.m. (0905 GMT), having slipped from opening levels of 44.36/39.

"There is underlying import demand, but no big corporates are there in the market today," said a dealer with a private bank.

A gradual waning of import demand, which was heavy last week and caused the rupee's slide to all-time lows of 44.75, indicated the rupee will soon settle into a range, dealers said.

Exporters waiting for the rupee to stabilise to sell dollars at peak levels may soon show interest, dealers said.

The rupee's slide last week forced the Reserve Bank of India, or RBI, to intervene with a warning against speculation.

It also imposed a 50 per cent surcharge on the import finance rate and raised the interest on overdue export bills to 25 per cent to speed dollar inflows and prevent bunching up of demand.

The central bank said it will continue to sell dollars through the State Bank of India, or SBI, and will meet foreign exchange needs towards oil imports and some government debt payments.

Forward premiums in far maturities were stable in afternoon deals but there was receiving interest (buy-sell swaps) in the near-term following the dip in call rates, dealers said.

The one-month premium was down at an annualised 2.38 per cent compared with highs of 2.52 per cent and Friday's 3.05 per cent.

Call rates closed at 6.9-7.1 per cent, down from opening levels around 7.25-7.5 per cent, with liquidity boosted by bond redemptions and a view Monday's 11-year bond auction will receive poor subscription leading to lower outlfows.

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Rupee firms up to 44.29/$