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Raghu Mohan
Mumbai, July 5: The rupee bounced back to gain 13 paise against the dollar to close at 43.23/25 on Monday as news of the army recapturing Tiger Hill and the agreement between US President Bill Clinton and Pakistani Prime Minister Nawaz Sharif on the retreat of guerrillas from the Indian side of the line of control (LoC) impacted the market.
This is the largest ever gain made by the Indian currency (against the US dollar) on a single day since the breakout of the Kargil crisis on May 26.
Forwards tracked a stronger spot rupee and the six-month annualised forward cover closed at 5.05 per cent. Bond prices rose by over 25 paise from their Saturday finish.
"The rupee will range between 42.20 and 42.25 levels on Tuesday," Mecklai Financial Services senior vice-president KN Dey said, adding: "The rupee could well hold these levels up to the general elections."
Opening the day at 43.28/30, stronger from its weekend close of 43.3850/3950, the rupee hovered around 43.2850/2950 levels till mid-session. Therupee would have gained further to close stronger at 43.20 levels had State Bank of India not bought dollars, dealers said. SBI's dollar purchases were estimated to be at $50 million, from around 43.2350 to 43.2550 levels. Foreign banks followed suit, but were later seen selling. There was a fair bit of dollar selling by other state-run banks as well, dealers said.
There were no cash deals today with US remaining closed. Tom/spot closed at 0.25/0.50 paise. The RBI pegged its reference rate for the dollar at 43.28, down from its previous fix at 43.38.
Forward premiums eased further by three to four paise. August dollars quoted at 27/28 paise (29/30 paise) with September at 44/46 paise (48/49 paise). February premiums were seen at 144/146 paise (155/157 paise), March at 167/169 paise (179/181 paise) and April at 189/815 paise (202/205 paise). "The movement was largely in line with the gains in the spot rupee, but there was much of receiving or paying," Dey at Mecklai said, adding: "New York was closedtoday, and exporters could come and receive on Tuesday. There could also be some covering, but both the spot rupee and forwards should hold steady until the general elections in September".
In the bond market, prices firmed up across all maturities. The re-issued 11.90 per cent 2007 was dealt at Rs 101.04/05 (Rs 100.76); 13.05 per cent 2007 at Rs 106.60 (Rs 106.45); 11.50 per cent 2004 at Rs 100.74 (Rs 100.56-100.59) with the 11.98 per cent 2004 t Rs 102.64 (Rs 102.34).
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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