Re loses ground against the dollar during the week

Despite a late sharp rally from 1-1/2 month lows, the rupee lost considerable ground against the us currency due to month-end pressures, rising oil prices and a robust dollar overseas in fairly volatile trade at the interbank foreign exchange (Forex) market during the week.

After tumbling to 1-1/2 month closing lows of Rs 43.77/78 per dollar around midweek, the rupee bounced back smartly to recover much of the losses and ended at Rs 43.6100/6150 per dollar, still sharply lower from the previous weekend finish of Rs 43.53/54 per dollar.

Customary month-end dollar demand on the back of a resurgent dollar overseas, mainly against the euro after France and the Netherlands rejected the proposed european union constitution sent the rupee reeling under severe pressure till midweek.

However, a subsequent rupee rally on fresh exporter dollar sales and unwinding of long dollar positions after the dollar adjusted downwards from multi-month highs against the euro in overseas dealings, arrested the rupee slide and limited losses, dealers said.

Erratic global oil price movements, mostly with a higher bias, also weighed on rupee value, they added.

The rupee slipped by 26 paise till Wednesday, but bounced back by 16 paise in the last two sessions with sentiments positive for more gains on Monday, in anticipation of dollar inflows from from a large software companies' overseas offerings.

Resumption of foreign institutional investors (FIIs) inflows into the equity markets was also a plus factor for the rupee, bankers said.

Rupee premiums on the forward dollar ended lower due to receiving by exporters following a cash dollar shortage scare at the start of the week even as late paying pressure from corporates and importers cushioned the fall in premiums.

Benchmark, six-months forward dollar premiums payable in November ended at 24-25 paise, lower from 27-1/2-28-1/2 paise last weekend after dipping to lows of 19-1/2-20-1/2 at midweek and far-forwards maturing in may-2006 ended at 48-1/2-49-1/2 paise, lower from 51-1/2-52-1/2 paise following a tumble to 43-44 paise on Wednesday.

In cross currency trades, the rupee surged against euro and strengthened against the British sterling in line with the dollar's rise to multi-month highs against the single unit. It, however, softened against the Japanese yen.