Rupee loses 27 ps on dollar buying spree

Continuing the falling trend from last week, the rupee on Monday ended at 44.98 against the dollar, as against Friday’s close of 44.71/7150.

Treasury officials informed that the dollar was a tad weaker in the morning sessions, and the first round of buying came from the large corporates, who were covering their short-positions and booking profits.

Following this, the rupee rallied to touch 46.95 levels when corporates began selling their holding. This caused the local currency to grow stronger, reaching 44.82/83 levels and at this juncture, state-owned players entered the market, which dealers felt was at the behest of the central bank.

This intervention brought back the rupee to 44.9950 levels and market participants said there were a few stray deals even at 45 levels. Forward premia were a bit volatile as the yield on the six-month forward premia ended at 1.79% (1.77%) and that on the one-year annualised premia closed at 1.68% (1.72%).

It was the weakest close since October 31, when it ended at 45.01/02. The Reserve Bank of India (RBI) was suspected of intervening earlier on Friday when the rupee fell sharply to 44.71 levels from 44.55 levels. RBI chief Yaga Venugopal Reddy had previously commented that RBI monitored exchange rate volatility and intervened when necessary.