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May 13, 1998

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Spot rupee steady, forwards up

Forward premiums zoomed up further with the six-moth annualised premiums crossing 9.00 per cent level to touch 9.58 per cent while the spot rupee continued to be quiet at Rs 39.77/78 following State Bank of India's dollar selling throughout the day.

The spot rupee opened at Rs 39.77/78 per dollar, moved in a narrow range most of the day and finally ended at the opening level, dealers said.

"The SBI was offering dollars at the level of Rs 39.77/78 and thus, the spot rupee could not ease from the opening level," said a dealer at the leading private commercial bank.

However, the forward premia saw considerable paying interest from importers, and with this, all the premiums shot up further. The six months forward premia in paise was closed at 172-179 paise as against 149-152 paise premium, showing a significant drop of 23-27 paise.

Aditya Gokhale, analyst at Lloyds Finance, said with the continuous rise in the forward premia, the spot rupee is already under pressure and poised to cross Rs 40 level within the span of a fortnight.

Another forex dealer said that with conducting of two more nuclear tests by India today at Pokhran, the market sentiments had been adversely affected in the interbank forex market and added that SBI unlikely to support the rupee by selling dollars for long time and the rupee likely to depreciate very soon.

Forex dealers further said that as soon as SBI disappears from the market the rupee will go down to the level of Rs 39.80/85 level.

Cash to spot business was done at 0.75-1 paisa premium. The forward premiums in paise were closed at 12-14 from 9-11 for May, 39-43 from 31-35 for June, 74-77 from 57-62 for July, 109-114 for August from 89-93, 142-147 from 115-120 for September, and 172-179 from 149-152 for October.

The six month annualised forward premia in percentage rose by almost 2.89 per cent during last two days of trading to 9.58 as against Friday's close of 6.69 per cent.

The one-year premia in percentage closed at 9.58 per cent as against yesterday's level of 8.59 per cent.

The Reserve Bank of India today fixed the reference rate for the US dollar at Rs 39.78 per dollar.

The rupee closed at Rs 65.06 per pound, Rs 22.32 against mark and Rs 29.42 against 100 yen.

UNI

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