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Kargil tension grips forex market; rupee down six paise to US $ at Rs 43.26

The rupee further slid by about six paise against the greenback on heavy dollar demand from corporates influenced by the continued Indo-Pak border skirmishes at an active interbank foreign exchange market today.

Opening slightly lower at Rs 43.20/22, the Indian unit came under pressure on sustained dollar buying by corporates who feared worsening of the border conflict and further fall of rupee.

It moved downwards gradually, sinking to the low of Rs 43.27/28 by early afternoon. However, the rupee recovered some of its intra-day loss when some foreign banks sold huge amount of greenbacks. The rupee finally closed at Rs 43.25/27, about six paise lower from the previous day's close of Rs 43.1950/2050.

State Bank of India also sold dollars, apparently to rescue the rupee, dealers said.

However, forward dollar market witnessed relatively lower activity. Forward premia moved up slightly on paying pressure, the near forwards ended up by 1-2 paise while far forwards rose by 3-4 paise. The sixth month and yearly annualised premia ended a bit higher at 5.11 and 6.10 per cent respectively as compared to 5.01 and 5.91 per cent of the previous day.

Cash/spot and cash/tomorrow premia finished at 1.00-1.25 paise and 0.50-0.65 paise respectively.

Meanwhile, the Reserve Bank of India fixed the reference rate for the US dollar at Rs 43.24 as against euro. Sterling ended at Rs 68.36 (68.65), yen at Rs 35.41 (35.55) and euro at Rs 44.62 (44.63).

At the Interbank call money market, he call rates opened steady at 8.75-9.00 per cent and quoted at lower levels throughout the day. It ended at 8.25-8.50 per cent, lower from the previous close of 8.75-8.90 per cent.

UNI

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