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Rupee sinks by 32 paise

After a week of rise, the Indian rupee fell sharply by 32 paise against the US greenback on hectic dollar buying by corporates and banks, in a very active interbank foreign exchange market.

The rupee opened slightly lower at 42.21/23, moved up to 42.15.17 level in the morning with less dollar demand. Later, it started sinking due to heavy dollar buying by corporates and banks to cover up their position, and closed at 42.51/53 against the previous close of Rs 42.19/21.

The State Bank of India stayed away from the market. Both spot and forward dollars were in high demand and the exporters sold less US currency, dealers said.

Forward premiums shot up, especially the far forwards -- from February onwards, these went up between 20 and 25 paise as heavy import covering was conducted there, dealers said.

The sixth month annualysed and yearly premiums were quoted higher at 10.18 per cent and 10.40 per cent respectively.

The cash/spot and cash/tom businesses were conducted at 4.50-5.50 paise and 1.50-2.00 paise premium respectively.

The monthwise premiums in paise were July 32/35 paise, August 66/70 paise, September 100-104 paise, October 134-139 paise, November 171-175 paise, December 207-212 paise, January 244-249 paise, February 283-293 paise, March 323/333 paise, April 360/370 paise, and May 395/405 paise.

Meanwhile, the Reserve Bank of India has fixed the reference rate for the US dollar at Rs 42.36, lower by seven paise against Rs 42.29 on the previous day.

In the overseas market, the pound sterling and yen weakened against the US dollar. The deutsche mark remained steady.

The rupee weakened against the sterling and dm but firmed up against the yen. The sterling was quoted at Rs 70.39, dm at Rs 23.34 and the yen at Rs 30.23.

UNI