The rupee notched up fresh gains against the dollar in the domestic forex market yesterday. It scaled an intra-day high of 35.58, the highest in recent weeks.
Resuming the day between 35.63 and 35.65, the Indian currency shot up to 35.58-35.60 on sustained dollar sell-offs, which began as soon as the market opened. State Bank of India (SBI), which made sizeable dollar sales, was followed aggressively by other banks. The closed quote for the day was 35.60. The sell-off in the greenback coincided with a near-absence of demand, which sent the rupee soaring.
Dealers ascribed the rupee surge to the expectation that the SBI would bring in its GDR funds. On the other hand, the forward rates were also lower, with the monthly premiums declining by more than 12 paise, specially on the long-term. Dealers said the expectation of a CRR cut has prompted exporters to sell forward and reap the maximum premiums on their positions. Importers, on the other end, are holding back because the rupee is expected to appreciate in the near future.
Monthly premiums were quoting at 13/15 paise for October, 30/33 paise for November, 53/56 paise for December, 83/86 paise for January, 109/111 paise for February, 138/141 paise for March and 165/168 paise for April. Annualised rates were, therefore, ruling at 8.5 per cent, down from 9 per cent at the beginning of the week.
