Corporate $ Demand Pushes Rupee Up 5 Paise

The spot rupee today ended up 5 paise at 47.1150 as against Wednesday's close of 47.1650. Forward premiums finished lower on the back of an easy overnight call rates.

"The rupee opened low at 47.1650/1750 due to some leftover demand from Wednesday. But, supplies coming in from corporates and exporters allowed the local unit to recover and end the day at 47.1150/12," said a dealer with a new private sector bank.

The demand remained good through the day, but, with nationalised banks selling dollars from the morning itself, the rupee ended stronger. "It looks like the Reserve Bank of India (RBI) will be happy with the rupee around 47.10 levels," he added.

"The spot should continue to remain in a narrow range as, every time the rupee crosses 47.15, nationalised banks come in to sell dollars, presumably to protect the Indian currency. So, the rupee sees very little of the required depreciation for a correction in its value," said a foreign exchange dealer. The RBI's reference rate for the dollar is 47.16 as against 47.11 on Wednesday.

Tomorrow the spot rupee should keep a range between 47.12 and 47.15 -- this seems to be the band in which the spot is most likely to stabilise. "Overall there is less pressure on the rupee due to various statements made about interest rates as well as the foreign institutional investors' figure of over $40 million," said a dealer with a foreign bank.

Forward premiums ended lower after a stable day at the overnight call money market. The 6-month (annualised) ended the day at 4.75 per cent as against 4.65 per cent on Wednesday. The one-year (annualised) premium closed the day at 4.72 per cent as against 4.70 per cent on Wednesday.

"The premiums remained inactive throughout the day as call rates were stable around 7 per cent. Overnight rates closed at 6.95-7.00 per cent. Tomorrow, forward premiums should also remain inactive and less traded," said a dealer with a private sector bank. Premiums should keep a range of 4.65 per cent to 4.75 per cent across all maturities.