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Rupee holds steady

The Indian rupee weakened by 10 paise against the US dollar in intraday trading, following good demand from banks and corporate sectors in an active interbank foreign exchange market in bombay today. The rupee, however, recovered to yesterday's level at close.

The Reserve Bank of India has restored the position on interest on post-shipment rupee export credit and relaxed measures on interest rates for export credit from yesterday, which improved the sentiments of exporters and weakened the Indian currency, leading dealers said.

The market opened nearly steady at yesterday's closing level of Rs 39.22-24 per dollar, and due to heavy demand it went up to Rs 39.32-34 during the intraday trading session, dealers said, adding that at one point, it hit Rs 39.35. But at this level, sellers entered the market and started booking profit which halted the further downfall of the rupee. Finally, the rupee recovered to close at Rs 39.22-24.

Due to relaxation in the interest rates from 15 per cent to 13 per cent, good booking in cash/spot basis and for farward basis in the merchant sections was witnessed.

Though the central bank did not intervene in the spot section, it interevened heavily in the near forwards in April and May. The Reserve Bank of India sold over US $50 to $60 million, dealers said, and added the premiums went down as RBI did not bother about spot dollar, and did not want the premiums to go up.

Despite being the first day after the Christmas and New Year holiday, good transactions were observed in the cross currency market.

Meanwhile, the RBI fixed the reference rate for the dollar at Rs 39.26 as against Rs 39.23 yesterday.

The cash to spot dollar was quoted 3-3.5 paise premium, tom/spot was traded at 2-2.5 paise premium, spot/Jan quoted at 14-16 paise premium, spot/Feb was traded at 38-40 paise premium and spot/June was traded between 133 and 135 paise premium.

UNI