FOREX REPORT
The rupee strengthened by 21 paise against the dollar on Wednesday to close at 42.17/19 against 42.38-40 previously on sustained dollar selling driven by bullish sentiment on the rupee, dealers said.
They said sentiment improved on news of the World Bank sanctioning $914 billion loans to India in the last two weeks. The forward rupee also firmed on selling by the State Bank of India (SBI). Dollar premiums softened to quote at 10.85 percent for one month (10.97 on Tuesday), 9.75 percent for three months (10.16), 9.50 percent for six months (9.90), and 9.60 percent for 12 months (9.92).
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"Near term sentiment is bullish on the rupee," one dealer said.
The spot rupee opened at 42.38/40 and steadily strengthened as exporter remittances flowed into the market driven by the news.
Dealers said dollar supplies exceeded demand as importer expectations changed. The cash-tom quoted at 3/5 paise, cash-tom at 2-3 paise, and tom-spot at 2.3 paise on high demand and low arbitrage activity.
The forward market was volatile as dollar premiums first strengthened but then came off after SBI entered the market as a receiver. SBI's sales supported the forward rupee almost single-handedly, dealers said.
Premiums (in paise) closed at: Jul - 36-37; Aug - 67-69; Sep - 98-101; Oct - 132-135; Nov - 165/170; Dec - 192-201; Jan - 232-235; Feb - 263-268; Mar - 302-307; Apr - 330-340; May - 365-375; Jun - 396-406.