Rupee resumes 20-month high at 43.50/52 per USD

By Staff
|
Google Oneindia News

Mumbai, Mar 26: The rupee opened to a 20-month high today at 43.50/52 per dollar against 43.56/57 on the previous day's close due to sustained selling of dollar by bankers, dealers said.

The rise in domestic unit was because banks sold dollars to raise funds to tide over a cash shortage in the money market.

A foreign bank exercised a large option contract at around 43.50 per dollar, which caused the rupee to spike in early trade to a high of 43.35, its strongest level since July 22, 2005.

Later, the partially-convertible currency fluctuated at 43.36 and 43.53 during the intra-day trade.

The call money was trading up today at 13-14 per cent as compared to 6-7 per cent when cash conditions are normal. But it was still well below last week's high of 70 per cent when corporate tax payments of around Rs 30,000 crore (USD 6.9 billion) caused a cash crunch in the system.

To generate funds, dollars were sold in the forex market, which caused a spurt in the rupee.

This week, the central bank will sell Rs 6000 crore of market stabilisation scheme bonds, which will keep cash conditions tight and could push the rupee higher.

Still, the rupee's gains could be limited as month-end demand for dollars from oil importers kicked in, dealers added.

UNI

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