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Rupee falls, but only a wee bit

The Indian rupee held almost steady today against US dollar in a volatile and choppy interbank foreign exchange market in Bombay on continued demand from corporate sectors and State Bank of India, India's largest commercial bank.

The market opened at Rs 38.53-55 per greenback and was hovering at same level for quiet some time. Later, due to aggressive demand from the corporate sectors and SBI on behalf of their clients to clear remittances, the Indian currency weakened to Rs 38.60-63 during the intraday trading.

At this level, India's central bank, the Reserve Bank of India, intervened, which crashed the dollar to Rs 38.35-40, dealers said, but added that as soon as the RBI walked away from the market, corporates and banks started biding the dollar again, finally closing the rupee at Rs 38.57-60, marginally lower than yesterday.

Marketmen said they were expecting that rupee to touch Rs 40 within a couple of days, because whatever amount was released by the RBI was absorbed by the market.

The central bank intervened with over US $100 million today. It sold the dollar at various levels in the spot and forwards -- April, May, June. A good amount of import booking was witnessed at Rs 38.40 and on the ,contrary good selling was also witnessed at Rs 38.60 level in the merchant booking.

Being a holiday in the New York market, overseas market remained quiet and steady in cross-currency section, and only 40 to 60 paise movement was witnessed throughout the day.

There was no no cash/spot trading following the holiday at the New York exchange. Tom to spot dollar was quoted at 0.50-1.00 paisa premium, spot/December was traded at 18.00--19.00 paise premium, spot/Jan was 38.00--39.00 paise premium and sixth month dollar traded at 128.00--131.00 paise premium. The forward premiums went up by 6 per cent, dealers said.

Meanwhile, the Reserve Bank of India has fixed the reference rate at Rs 38.37 as against Rs 38.56 on Wednesday.

UNI