Domestic Currency Surges To Eight-Year High,Last Seen In 1999

The rupee surged to an eight-year high of 43.04/05, last seen in 1999. Banks swapped dollars for rupees to meet immediate needs, giving a boost to the domestic currency. The rupee opened at about 43.14/15 and touched an intra-day high of 43.01/02. On March 26, the rupee had ended at 43.30. The six-month forward premia ended at 5.31 per cent (5.45 per cent) and 12-month forward premia closed at 4.04 per cent (4.15 per cent). Rupee liquidity dried up, pushing call rates to an intra-day high of 25-30 per cent, forcing banks to borrow Rs 27,395 crore under the RBI''s repo window at 7.5 per cent. Advance tax outflows of around Rs 35,000 crore also sucked out cash from the system. With the financial year drawing to a close, banks are selling dollars in the market to meet cash requirements. The apex bank is believed to have bought $8 billion from the forex market between November and January. Dealers said that most exporters would have covered their positions for the next six months (the forward premia has been ruling high).