Forwards Rise Marginally, Re Follows Suit

The rupee today ended marginally higher at 49.040/0450 against the dollar compared with Monday's closing of 49.04/05. Forward premiums increased a bit tracking the government security yields.

The rupee opened at yesterday's closing level and stayed around that level throughout the day. Corporate demand for dollars that kept the currency under pressure was not there. But there was not enough supply, too, to strengthen it.

A dealer with a foreign bank said, "The market was very thin and rangebound today. We expected the dollar supply from the Reserve Bank of India (RBI) to push up the rupee over the 49 mark. However, it did not happen."

In the forwards market, two counteracting factors kept the premiums stable. The liquidity in the money market was good, but the government security yields were rising. The six-month annualised premium closed at 5.95 per cent compared with Monday's close of 5.90 per cent. And the one-year annualised premium closed at 5.60 per cent compared with Monday's close of 5.55 per cent.

Dealers are expecting the spot rupee to rule in a range of 48.95 to 49.05 tomorrow. The treasurer of a foreign bank said, "There would not be much pressure from the importers. However, the central bank may not allow the rupee as it will hurt the exporter sentiment."

Forward premiums are likely to remain stable as the government security yields are likely to be in a tight range on the back of Rs 6,000 core auction.

The six-month annualised premium is expected to remain between 5.90 per cent and 5.90 per cent, while the one-year annualised premium may move in the range of 5.50 per cent to 5.55 per cent.

Dealers, however, said any deterioration in the border condition could weaken the rupee and lift forward premium rates.