The Hindu Business Line : Re gains 9 paise

The rupee soon followed the Sensex in the politically unclear environment and went through a roller coaster ride to an intra-day, 8-month low of 46 only to later recover and closed nine paise higher at 45.51/52, up from previous close of 45.60/63.

As the equity markets dipped, foreign banks, possibly at the behest of their FII clients were seen hectically buying up dollars to exit share positions. The dollar demand was further accentuated by domestic corporates, said a dealer in a private bank.

The demand was relieved as the Reserve Bank of India is said to have sold $300-500 million from its forex kitty through PSU banks. During the day, the central bank had also made reassuring statements to the market that any bank in need of dollars could purchase the same directly from it.

The rupee opened at 45.45/50 and moved in a hectic pace with 10 paise variation for every bid. Intra-day low of 46.00 was touched on heavy dollar demand and intra-day high was seen at the open of 45.45/50 even as the first deal was struck at 45.48. The weak trend in the domestic currency is expected to continue; 46 mark may be tested again until the new Government is sworn in and some clarity emerges on its economic policies.

In the forwards market, the discounts have been removed to a large extent with importers coming in to cover their so far unhedged positions. Exporters were also seen cancelling their earlier contracts and rebooking at lower levels.

The six months forward closed at - 0.17 per cent ( - 1.25 per cent) and the one-year forward closed at - 0.05 per cent ( - 0.56 per cent).