Rupee to hold steady: experts

Others explained that the rupee has been under pressure for some time now and will continue to be so in the near term. The cost on ECBs is already up following the Asian financial meltdown with traditional subscribers like Japanese and Korean banks staying off the syndication market.

The rupee, which saw a low of 42.44 on June 10 has gained since and held steady in the 42.15-42.30 band. The local currency closed today at 42.17/22. Receiving by exporters and forward contract cancellations by importers have helped forward premiums to come of their earlier highs. The six-month annualisedforward cover finished on Friday at 10.43 per cent, down from its overnight quote at 11.57 per cent.

Standard Chartered Bank8217;s head-trading money amp; foreign exchange, Janak Desai, was of the view that Moody8217;s downgrade today had been factored in by the market. Desai added: quot;Most have hedged their positions in the forex market8230;There will be an initial panic on the rupee front, but I see it correcting itself soon..quot;

Desai added that while spreads on bonds floated by Indian entities in the international market may further increase, on the ECB front, there may not be any dramatic changes in terms of costs as few corporates are tapping them anyway. Rabo India Finance8217;s director and leading corporate banker, Rana Kapoor, said,quot;The latest downgrade by Moody8217;s had already been factored in by all concerned. quot;.

According to a Reuters report, the Indian rupee was expected to weaken when it opens on Monday. quot;The rupee will open straightaway at 42.30. One has to now look at a 42.50/43 range,quot; said the chiefdealer at a foreign bank. quot;But I don8217;t underestimate the power of the RBI or the Ministry of Finance. Surely, they would have thought of this contingency,quot; he added.