Exporter Dollars Prop Spot, Long Forward Dips

The spot rupee strengthened further today to end at 47.75/76 compared with its close at 47.80/81 yesterday.

Forward premiums fell at the longer end of the maturity curve as interest rates in the money market dropped.

The spot rupee opened at 47.80/81 and strengthened due to dollar supplies from exporters.

It touched the day's high of 47.74/75. At this level, the state-run banks rushed to pick up the greenbacks, resulting in the rupee closing slightly lower at 47.76/77.

A dealer with a foreign bank said there was no pressure from the importers, and only supplies coming from the exporters. This helped the rupee to recover. However, the participants remained cautious over the political uncertainty in the subcontinent.

Meantime, the long forward fell after Tuesday's sharp appreciation. The one-year premium wound up at 6.15 per cent against yesterday's closing of 6.25 per cent. The six-month premium, however, remained unchanged at 6.45 per cent.

A dealer with a private sector bank said premiums have been moving with the swings in government securities. "Premiums went up as the yields on gilts rose on Tuesday. They fell today with the yields," he said.

The rupee is likely to appreciate tomorrow as dealers are expecting more dollar inflows through export proceeds and remittances. They see the rupee in the 47.73-47.80 band.

The treasury head of a foreign bank, however, expects the state-run banks to step in to stem any sharp rise in the rupee by buying dollars. Forward premiums are expected to remain stable with downward bias.