Forward dollar zooms

Importers were covering up their exposures on fears that foreign capital flows into India would dwindle with sanctions imposed in response to the nuclear tests, forex dealers said. quot;There is panic import covering in the market. Light demand is also pushing premiums up,quot; a foreign bank dealer said.

In the forward segment, the six-month dollar closed at 8.25 per cent 8212; around 1.4 per cent higher than Friday8217;s close of 6.7 per cent. According to dealers, the SBI was seen receiving in the forward market apparently on behalf of the RBI. The one-month forwards moved up to 6.5 per cent from 5.75 per centand the one-year forwards to 8.60 per cent from 7.9 per cent.

Dealers said that the bearish sentiment will prevail for a day and two till the picture becomes clearer.

In the spot segment, dealers said that the rupee opened at 39.7550 and lost ground immediately to trade at 39.78. State Bank, however, came to the rupee8217;s rescue and sold dollars in a big way. The rupee traded at 39.77/78 level throughout the day as the demand for dollars was being met by the SBI.

Dealers said that if Japan and US do not retaliate with sanctions, the spot rupee will strenghten and the forward rupee will also gain against the dollar. The rise in forward dollar indicates that the rupee will depreciate to that extent against the dollar in future.

Foreign banks in both the markets turned bearish as they started buying dollars and selling securities. quot;Foreign banks feared the proposed sanctions might effect the economy and they are trying to make an exit by selling rupees,quot; said a dealer. In the securities market, prices ofgilts government securities fell by 60 to 100 paise across the board.