MUMBAI, July 10: The proposal of the US Senate to lift agricultural sanctions imposed on India propped up the rupee on Friday to a intra-day high of 42.44 against the dollar - a 16 paise gain over the previous day's close. The forward premium on dollar softened considerably with the six-month annualised forward premium falling by 75 basis points over Thursday's level to close at 8.72 per cent.``The easing of sanctions is being interpreted as a positive sign for the Indian markets,'' said a dealer at a private bank. The US Senate on Thursday voted to lift agricultural sanctions imposed against India and Pakistan after the nuclear tests in May, but left other economic sanctions intact.
The rupee, which opened at 42.50/54, stronger than its previous close of 42.57/60, strengthened further on good dollar-selling by banks and exporters to touch its intra-day high of 42.44. "There was a lot of selling in the early part of the day by banks and corporates," a dealer in a private sector bank said.
Aftertouching 42.44, the rupee fell as a foreign bank entered to buy dollars on behalf of its corporate client to touch its intra-day low of 42.54. The rupee subsequently closed at 42.52/54 -- a gain of 5 paise over yesterday's close.
The fall in the forwards across all maturities continued unabated and dealers predict the forward rupee will soften further with sentiments dramatically improving in the forex market. The proposed launch of the Resurgent India Bond -- which is likely to mop up over $2 billion -- has also contributed to the positive sentiment.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
