Rupee finally gains against dollar

MUMBAI, June 17: The rupee rallied to close at 42.14/17 on Wednesday, up by 12 paise over Tuesday's finish as banks unwound their long dolla...

MUMBAI, June 17: The rupee rallied to close at 42.14/17 on Wednesday, up by 12 paise over Tuesday’s finish as banks unwound their long dollar positions and sentiment on the stock markets improved with the BSE Sensex soaring by a massive 240 points. In kerb, rupee strengthened to quote at 42.09.

Opening the day at 42.27/30, compared to its Tuesday’s last quote at 42.26/30, the rupee quickly went lower at 42.31/33. In late afternoon trades, the rupee recovered to 42.29/30 levels as banks went short on the dollar and greenback supplies from corporates improved in a thin market.

The six-month annualised forward cover jumped to an intra-day high of 13.30 per cent before heavy receiving by the State Bank of India and a few exporters helped it recover to 12.33 per cent by close. March dollars closed at 390/395 paise from the earlier high at 417/423 paise, April at 425/430 from 433/458 paise and May at 457/463 paise from 485/492 paise.

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Forex experts, however, said the rupee’s rally today is a purely temporaryone. "This is one of those `random’ days. The appreciation in the spot rupee today is purely inter-bank driven… the much touted Friday-Monday effect. If demand for dollars in the forward market is anything to go by, the rupee will continue to be weak in the spot market again," said a forex dealer.

Simply put, the Friday-Monday effect works as follows. The spot dollar quote today is valued-dated Friday. Quite a few banks sold dollars when it was ruling at the day’s high at 42.31/33. They are hoping to buy the dollar tomorrow at a price ranging between today’s close at 42.14/17.

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