PSU banks sell dollar to halt rupee fall

After the initial setback, the rupee ended flat against the US dollar on strong greenback supply by state-owned banks towards the fag end at the interbank forex market. The rupee opened on a bearish note at 49.03/04 and further slipped to the day’s low of 49.06 in the morning session on nervous dollar covering by corporates triggered by renewed fears of an Indo-Pak conflict.

However, increased dollar sales by some state-run banks lifted the rupee up later in the day. The Indian currency closed at 49.02.03, unchanged from its Friday’s close. Forward dollar premiums continued to soar on heavy paying pressure triggered by apprehensions of a conflict with the neighbour. The upsurge in premiums was sharper in near forwards.

“War clouds continued to exert pressure on the rupee. Though the spot rupee ended steady after dollar selling support by state-run banks, apparently on behalf of the reserve bank of India (RBI), forward premiums continued its upward movement due to border uncertainty,” dealers said.