Rupee Loses 10 Paise, Forwards Firm

The rupee lost 10 paise against the dollar yesterday on the back of heavy corporate demand even as the deadline for converting exporters foreign exchange balances expired. The rupee ended at 45.78 against the dollar, off the day's low of 45.82. On Tuesday, the rupee closed at 45.68. Dealers expect the rupee to weaken further and inch toward 46 level today as importers are rushing for cover as they felt the rupee would not strengthen further. Forward premiums firmed up as exporters, after selling dollars in the market, rushed for cover for their future imports. The six-month annualised forward premium went up from 4.56 per cent to 5.08 per cent in market fraught with rumours of RBI is planning to announce further tightening measures. The RBI continued to suck out liquidity from the system by mopping up Rs 9,090 crore through a combination of one-day and five-day repo. The RBI had expected $1 billion worth of inflow following the directive of liquidating 50 per cent of the outstandings of the export earners' foreign currency (EEFC) accounts. However, dealers estimated that a net of around $400 million has entered the market. An RBI spokesperson said the exact quantum of inflow would be known on August 25. The RBI on August 14 halved foreign currency limits for exporters and directed them to convert these into rupees by August 23. Exporters converting their EEFC balance excesses were the main source of dollar supplies in the market. "While bringing in their dollars they are also covering in the forward market, which in turn is putting pressure on the spot....the impact of these flows has been mitigated to that extent," said the private bank dealer.