Exporters $ Unloading Betters Spot, Forwards Slightly Up

The Indian unit strengthened during the day to close at 47.15 against yesterday close of 47.1650/1725 on the back of improved supply from the exporters. Forward premiums went up a bit as call rates hardened marginally.

The spot rupee opened around 47.17 in the morning and weakened further to touch 47.1725. The Indian currency, however, strengthened later to close at 47.15 against the greenback.

According to dealers, foreign banks were the main suppliers while the nationalised banks were the chief buyers of the dollar. A dealer with a private sector bank said, "The rupee fell in the morning on the concern over lower foreign institutional inflows. But as exporters supply came through the foreign banks, the spot rupee strengthened."

A dealer with a foreign bank said, "Yesterday's weakening of the Indian currency was partly contributed by the US holiday on Monday. As the US market opened yesterday, the supply increased considerably and it has also helped the rupee to strengthen."

Dealers said that most of the trades were done in the 47.15-47.16 range.

The Reserve Bank of India (RBI) reference rate was 47.16 today against 47.13 on Friday.

Forward premiums remained almost unchanged. The benchmark six-month premium closed at 4.56 per cent against 4.54 per cent yesterday while the one-year premium closed at 4.70 per cent against 4.68 per cent yesterday.

A dealer with a nationalised bank explained "Forward premiums generally track the overnight rates. As call rates went up a bit so forward premiums too."

The spot rupee is likely to remain little changed tomorrow. Dealers are expecting the Indian currency to stay around 47.14-47.16. A dealer said, "There will not be much change in the supply-demand position tomorrow and hence the rupee should be around today's level."

Forward premiums are likely to hover around the current levels as the dealers do not see much change in call rates.

"We expect call rates to hover around the seven per cent level and hence forward premiums should be very close to today's level," said a dealer with a foreign bank.