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Rupee drops by six paise

The Indian rupee closed further lower against the US greenback following speculative covering, despite the Reserve Bank of India's intervention in the spot and heavy selling of forward dollars in volatile trading at the interbank foreign exchange market today.

The currency opened at Rs 39.40-41 per dollar, fell sharply to Rs 39.63-65 sometime before mid-session due to speculative covering by corporates and dollar demand from the leading banks reportedly on account of government remittances. The apex bank then entered the market with a token intervention in the spot but it sold heavily in the forwards to cool down the sentiments.

The rupee reverted to Rs 39.40-42 in the presence of the RBI. However, it again came under pressure and closed lower at Rs 39.47-50 as against the previous close of Rs 39.41-44 per dollar.

Cash-spot business was done at 0.50 paise premium.

In the forwards, forward premia rose sharply against the previous levels.

Half-yearly premia in percentage was quoted at 8.12 while the annualised at 8.47 per cent.

The RBI fixed reference rate for the dollar at Rs 39.63, higher by 25 paise as against previous day's fix at Rs 39.38.

The State Bank of India made moderate dollar purchases in the morning session and sold its positions in the afternoon, forex dealers said.

They also attributed the further fall in the rupee value to the downtrend in the Asian currencies and firming up of dollar against the major European currencies.

The rupee was traded in the range of Rs 64.38 and Rs 64.12 per pound against the pound sterling.

The currency moved in the narrow range of Rs 21.60-62 against the mark and it closed at Rs 29.48 against the yen after opening at Rs 29.60 (per 100 yen).

UNI