The rupee stopped short of the psychological 50 mark against the dollar on Friday, indicating that the Reserve Bank of India may have intervened in the market to stem its slide.
On Friday, the rupee opened at 49.57. In volatile trading, it touched a low of 49.90 and a high of 49.05. It ended the day at 49.43, about 13 paise higher than the previous close of 49.56.
It is believed that the RBI propped up the rupee by selling dollars through state-run banks.
The reversal from 49.60 to 49.10 happened in just four-five minutes as the banks sold dollars, said a dealer.
Forward market
In the forward premia market, the 12-month premium closed at 2.76 per cent (2.63 per cent).
There was dollar selling by two large corporates that may have booked forward contracts earlier and saw an opportunity to make some money or may have had huge remittances, said the head of treasury of a public sector bank.
The rupee is likely to trade between 49.30 and 49.70/90 till end of this month due to pressure of half-yearly closing and settlement of import bills. Starting October, the rupee could be back to 47 levels, he said.
The Bank of Korea also sold about $5 billion to support the won, which has weakened by 10 per cent.
Overseas scenario
Even in the overseas markets, the euro reversed some of its intra-day losses as traders sold dollars to book profits.
Mr Indranil Pan, Chief Economist, Kotak Mahindra Bank, said in a report that the dollar- rupee has a significantly high negative correlation with the euro-dollar pair.
Hence, with further euro-dollar dips, the dollar-rupee runs the risk of further depreciation bias.