after the rupee touched an intra-day low of 43.58 against the dollar before rebounding to finish the day at 43.41.

The SBI was rumoured to have pumped in nearly $75-100 million on Monday to stem the rupee fall. This is likely to lead to a tightening in the call money market.

However, forex dealers were unanimous that the rupee is likely to weaken to 43.70 level till the elections, after which it will appreciate as the newly elected government will be expected to carry out a fresh wave of economic reforms. Opinion polls--including a telephonic poll by The Financial Express

--have predicated that the Bharatiya Janata Party (BJP)-led alliance will come back to power.

"I would say today's volatility is merely psychological. I consider therupee's level of 43.50/60 stable," Vaidya said. He added that over a period of a year the rupee is expected to depreciate by 3-4 percentage points. "Till the elections, the rupee is expected to remain stable as exports are up, reserves buoyant, the fiscal deficit is under control and signs of an economic recovery are visible," Vaidya said.

According to chief dealer at ABN-Amro Bank, V Ravikumar, the rupee is expected to depreciate by 10-12 paise by August-end and depreciate further till the elections. "A few fundamental changes have taken place, therefore there is a demand for dollars," he said. Forex dealers said that government agencies, on account of servicing of payments abroad, were actively in the market buying dollars.

According to vice-president (Forex) Essar Group, NS Paramasivam, the rupee is expected to weaken to 43.60/70 level by elections after which it is expected to appreciate. "Rupee will stabilise after the elections. I think the real value of the rupee (adjusted to inflation) hasdepreciated only marginally. It can appreciate only after this and the Reserve Bank's strict vigil of the rupee will also ensure stability," Paramasivam said.

Senior executive vice-president in ICICI Bank PH Ravikumar said that the bank's outlook for the rupee continues to be stable and the rupee is expected to remain at 43.50 levels. He added that the rupee will be traded at 43.60 by December.

Credit Lyonnais country treasurer PH Ramaswamy is confident that the rupee will remain in the range of 43.10 to 43.50 to a dollar till December and by March 2000 it may dip to 44.50.

Fundamental factors like strong FII inflows ($400 million per month) and the low level of inflation had led to a strengthening the rupee even though other currencies, particularly the Euro, were weakening against the dollar, forex dealers said. "This has led to some demand for the dollar as no importer was covering at even such low forward premiums," Ravikumar of ABN-Amro bank added.