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Economic Survey dampens forex market; rupee plunges 12 paise to Rs 42.57 vs $

Reacting sharply to the discouraging economic survey released in Parliament and the unstable political situation, the rupee today declined sharply by 12 paise before touching a seven-week low of Rs 42.56/57, against the greenback in an active trading at the interbank foreign exchange market.

Opening nearly steady at Rs 42.4450/45, the rupee came under continuous pressure by sustained dollar buying resorted by banks and corporates, restricting its movements only to southwards.

Some panic-like situation was noticed in the forex market as the Economic Survey for 1998-99 has hinted at a correction in the exchange rate of rupee in the light of exchange rate developments in the competitor countries, especially in southeast Asian countries.

The survey stressed the need to monitor closely the value of the rupee to ensure that exports continue to be price competitive in the international marketplace.

The rupee ended at Rs 42.56/57, showing a loss of 12 paise as against the pevious close of Rs 42.44/45.

Heavy import covering was conducted in near and far forward dollars. Near forward rose by about 8 paise while far forwards shot up by 20-25 paise. The sixth month annualised and yearly premiums ended higher at 7.95 per cent and 8.24 per cent respectively from 7.23 per cent and 7.68 per cent of the previous day.

Cash/spot and tomorrow finished at 3.25-3.50 paise premium. The month-wise premia in paise were: March 25-28 (21-23), April 56-59 (50-52), May 81-84 (72-74), June 110-113 (100-103), July 137-140 (126-129), August 168-171 (151-155), September 199-202 (179-182), October 230-233 (208-211), November 261-264 (237-240), December 291-294 (267-270), January 321-324 (296-299) and February 348-353 (323-327).

Meanwhile, the Reserve Bank of India has revised the reference rate for US dollar five paise higher at Rs 42.49 as against Rs 42.44 of the previous day.

In the cross currency, the rupee slightly appreciated against the pound sterling, while it eased marginally against euro and Japanese yen. Sterling ended at Rs 68.42 (Rs 68.70), euro at Rs 46.78 (Rs 46.65) and yen at Rs 35.08 (Rs 35).

In the domestic money market, the call rates opened steady, ranged between 8.75-9.25 per cent level during the day before closing slightly lower at 8.65-8.90 per cent.

UNI

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