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Rupee makes smart recovery as India tastes success in Kargil; Rs 43.23 vs $

• Rs 43.23 vs $
• Rs 43.80 vs euro
• Rs 67.17 vs pound
• Rs 35.31 vs yen (100)

The Indian rupee continued its rally and closed stronger by eight paise against the US greenback on news that Pakistan-backed intruders are on the retreat in Kargil.

This boosted the market sentiment at the interbank foreign exchange market today.

The rupee opened sharply higher at Rs 43.17/22, brightened the prospects of an early end to the border conflict. However, the rupee's initial gain was short-lived, as heavy dollar purchases by banks and corporates, especially State Bank of India at that lower levels, put some pressure on the rupee.

It eased from the opening level to Rs 43.2350/2450 level around noon. Thereafter, the Indian currency remained around that level and closed at Rs 43.23/24, about eight paise higher from the previous day's close of Rs 43.31/33.

Dealers said though the market witnessed hectic dollar buying by corporates and banks in the morning when the rupee opened higher, it slowed down later when the rupee stabilised around Rs 43.23/24 level. SBI bought dollars at Rs 42.22/ 24 levels, they added.

Forward markets remained comparatively dull and premia further came down on receivings. Near forwards eased by 1-2 paise while far forwards dropped by 7-8 paise. The sixth-month and yearly annualised premia ended lower at 4.56 per cent and 5.08 per cent respectively as compared to 4.80 per cent and 5.31 per cent of the previous day.

Cash/spot and cash/tomorrow premia finished at 0.50-0.75 paise and 0.25-0.50 paise respectively. The month-wise premia in paise were: July 6.5-7.5, August 22-24, September 37-39, October 54-56, November 72-74, December 89-91, January 110-111, February 128-131, March 149-152, April 169-172, May 189-192 and June 209-212.

Meanwhile, the Reserve Bank of India fixed the reference rate for $ 15 paise lower at Rs 43.24 as against Rs 43.39 of the previous day.

In the cross currency also, the rupee appreciated against pound sterling, euro and Japanese yen. It ended against sterling at Rs 67.17 (67.22), euro at Rs 43.80 (44.15) and yen at Rs 35.31 (35.42).

At the domestic money market, the call rates ruled in a narrow range of 8.15-8.35 per cent throughout the day and closed at 8.20-8.30 per cent, a bit higher from the previous closing level of 8.15-8.25 per cent.

UNI

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