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Rupee loses ten paise against the dollar

The Indian rupee declined further sharply by 10 paise against the US greenback on sustained corporate dollar demand at the Interbank foreign exchange market in absence of positive response from Pakistan on withdrawal of the withdrawal of forces from the Line of Control in Kargil today.

The rupee opened nearly steady at 43.31/33, which was also the day's high, came under pressure on heavy dollar demand from banks and corporates spurred by the border crisis. It continued to fall during the day, and ended lower at 43.40/42, as against 43.31/32 of the previous day, losing 10 paise of its value.

Dealers said corporates bought dollars fearing a further crash of the rupee as there is no sign of peace at the border. A private sector steel company bought a huge amount of dollars today, they added.

Activity in the forward markets remained relatively dull compared to the spot segment, and premiums, after moving in a narrow range, eased slightly on receivings. Near forwards eased by one paise while far forwards declined by 3-4 paise. The sixth month and yearly annualised premium closed a bit lower at 4.82 per cent and 5.31 percent respectively, as compared to 4.84 per cent and 5.37 per cent of the previous day.

Cash/spot and cash/tom finished at 1.50-2.00 paise and 0.25-0.50 paise premium respectively. The monthwise premiums in paise were: July 8-9, August 24-25, September 40-42, October 58-60, November 78-80, December 96-98, January 118-120, February 139-141, March 161-162, April 181-182, May 201-203 and June 222-224.

The Reserve Bank of India fixed the reference rate for US dollars at Rs 43.36 as against Rs 43.29 of the previous day.

In the cross currency, the rupee weakened marginally against pound sterling while it appreciated a bit against the Japanese yen and the euro.

The sterling ended at 67.60 (67.53), the euro at Rs 44.24 (44.28), and the yen at Rs 35.43 (35.50).

Meanwhile, the Standard Chartered Bank today transacted the first interest rate swap in Indian rupees with the payment of a fixed rate against overnight MIBOR with ICICI and Deutsche Bank for a tenor of six months.

Early today, deals have been entered into with counterparties across the four segment of the market -- financial institutions, primary dealers, banks and corporates. The transaction involves an exchange of a fixed rate of interest for a floating rate of interest based on the MIBOR quoted by Reuters and the National Stock Exchange.

ABN and Vysya Bank have reportedly transacted an interest rate swap in rupees. In the domestic money market, call rates ruled between 8.20-8.40 per cent and closed steady at 8.25-8.40 per cent.

• Rs 43.40 vs $
• Rs 44.24 vs euro
• Rs 67.60 vs pound
• Rs 35.43 vs yen (100)

UNI

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