The Hindu Business Line : Rupee rises on RBI intervention

The rupee slightly appreciated against the dollar on Friday as the central bank intervened in the market to cap the dollar's gain. The domestic currency opened at 42.93/94 and traded at 42.96 for most of the day. It ended the day at 42.92/93 against the previous close of 42.96. Dealers said there was all-round dollar buying initially as inflation touched a 13-year high of 11.05 per cent and the Sensex fell by over 500 points. However, the central bank reportedly sold dollars in the forex market to prevent the rupee from depreciating beyond 43. "Since the RBI was there to protect the rupee, there was some selling pressure," said a dealer at a private bank. Foreign banks, which were buying dollars earlier in the day, also turned sellers towards close which caused the rupee end higher against the dollar. There was a sharp upward movement in the forward premia market as the 6-month premium closed at 3.95 per cent (3.28 per cent) and the 12-month ended at 3.50 per cent (2.99 per cent). Dealers said that banks bought forward dollars reacting to the high inflation number. - Our Bureau

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