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Rupee recovers smartly over peace prospect in Kargil; up nine paise to Rs 43.31 vs $

• Rs 43.31 vs $
• Rs 44.15 vs euro
• Rs 67.22 vs pound
• Rs 35.42 vs yen (100)

The Indian rupee recovered smartly by nine paise against the US dollar on heavy corporate dollar off-loading towards the end of trading as Pakistan's decision to appeal to the Kashmiri militants to withdraw from Kargil boosted the market sentiment at the interbank foreign exchange today.

The rupee opened steady at Rs 43.40/42, hovered around that level till afternoon as the market remained more or less dull. Major market players adopted a wait-and-watch approach, anxiously waiting favourable news from Islamabad where the crucial meeting of Pakistan Cabinet Committee for Defence was going on.

The rupee ended at Rs 43.31/33 showing a gain of nine paise against the previous close of Rs 43.40/42 per dollar, as soon as the news reached regarding Pakistan' decision reached the market, dealers said.

The news of the Pakistan decision to appeal to the kashmir militants to withdraw from Kargil brightened the prospect of an early end to the border crisis. The forex market suddenly became active with corporates resorting to dollar selling spree.

However, importers showed slack interest, expecting further rise of the rupee. Tracking the spot market, forward premia eased slightly on receivings. Average monthly premia came down by 1-2 paise. The sixth-month and yearly annualised premia ended a bit lower at 4.80 and 5.30 per cent respectively, as compared to 4.82 and 5.31 per cent of the previous day.

Cash/spot and cash/tomorrow finished at 1.50-1.75 paise premium and 1.00-1.25 paise premium. The month-wise premium were: July 7.5-8.5, August 24-25, September 40-41, October 56-58, November 76-78, December 95-97, January 116-118, February 136-138, March 157-159, April 177-180, May 198-201 and June 219-222.

The Reserve Bank of India fixed the reference rate for US dollar at Rs 43.39 as against Rs 43.36 of the previous day.

In the cross currency, the rupee appreciated against pound sterling and euro while it remained nearly steady against Japanese yen. Sterling ended at Rs 67.22 (67.60), euro at Rs 44.15 (44.24) and yen at Rs 35.42 (35.43).

In the domestic money market, the call rates ruled in a narrow range of 8.25-8.35 per cent and closed at the same level.

UNI

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