Spot rupee closes nearly 8 year high at 42.90/92 per USD

Mumbai, Apr 5 (UNI) The spot Rupee today closed nearly eight year firm note at 42.90/92 against the US dollar as compared to its previous day's close of 43.06/08 as dealers built short positions in the dollar on expectations that Reserve Bank of India would not invervene to limit gains, dealers said.

The spot Rupee resumed high at 42.99/43.02 against per US dollar compared to 43.06/08 on previous day's close on fresh purchase of dollar from importers.

Later, the rupee slipped further away from near eight-year highs of 42.86 in intra day trade yesterday, giving up early gains against the dollar as importers bought the US currency and helped push the Indian unit above the 43 mark.

The Rupee made a solid march to fresh highs but early gains came to naught for the day once corporate dollar demand emerged and the upside lost steam.

The Rupee was quick to breach 43.00 with traders inclined towards liquidating dollars till any kind of support surfaced for the greenback. Traders kept a wary eye on State-run bank activity even as the pair touched 42.85 and steadied around 42.90 in intra day trade. Dollar demand came later in the day even as call rates came off indicating some improvement in rupee liquidity.

It hit a high of 42.84, its strongest level since June 1, 1999 Meanwhile, interbank call money rates opened at 7.50-8.00 per cent slightly higher than their previous closing level of 7.00-8.00 per cent, traders said.

The traders reported that cash supplies had increased in the market but liquidity is expected to tighten. However, yesterday's LAF auction indicated that most banks were still in the deficit.

Inspite of improved funds, money market rates are likely to be firm due to upcoming bond auction and ahead of holiday tomorrow on account of 'Good Friday'.

Later, the Rupee ended at 42.90/92 per dollar, closing in on a recent high of 42.84, its strongest level since June 1, 1999. The Rupee rose from Wednesday's close of 43.06/08.

The forex market will remain closed on Friday on account of Good Friday, traders added.

Forward premia ended 25-35 paise higher as stronger spot Rupee in early session compelled exporters to sell forward dollars in the market. Six-month and twelve-month forward premia closed at 5.36 per cent(5.00) and 4.24 per cent(4.06) respectively.

Besides, the domestic unit witnessed a weaker trend against major world currencies. Against the Euro it closed lower at 57.22/24 (57.25/26), while Pound also finished at 84.30/32 (84.64/66) per unit each and Yen was quoted at 36.00/36.02 (36.06/07) per 100 units, brokers added.

UNI