Money Mart Inflows Clip Forwards; Rupee Drab
Spot rupee was dealt in a narrow range between 47.1225 and 47.1250 against the dollar on Friday, amid thin trades.
Forward premiums fell on the back of very easy liquidity in the banking system and the consequent low overnight rate.
Spot rupee opened today in the range of 47.1245 to 47.1250. The Indian currency, however, strengthened marginally later to close in the range of 47.1225 to 47.1230.
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"The forex arena continues to remain dull as there were no major inflows or outflows, " said a dealer with a new private sector bank.
Dealers said that most of the transactions were executed around 47.1230 levels.
The Reserve Bank of India's (RBI) reference rate for the dollar was Rs 47.12 -- same as it was on Thursday.
Dealers said with trading volumes very low it was difficult to say who were the major buyers and sellers of greenbacks.
"There was virtually no demand today from any bank. There were only a few stray deals executed," said a dealer with a new private sector bank.
Forward premiums, however, dipped after the money market received a Rs 8,500 crore liquidity infusion following the redemption of government security.
The six-month annualised premium went down to 4.75 per cent compared with 4.78 per cent on Thursday, while the one-year premium wound up at 4.80 per cent as against 4.85 per cent on Thursday.
The treasury head of a private sector bank said, the liquidity in the money market is likely to improve further next week following tomorrow's inflows.
"Moreover, there is little possibility of an auction next week. Therefore, there will not be any flushing out of liquidity from the banking system," said a dealer with a old private sector bank.
Spot rupee is likely to remain range-bound in a band of 47.11 to 47.14 during next week.
Forward premiums, however, are expected to go down afresh if the liquidity continued to be easy and the call money rates remained low around the bank rate of seven per cent.
Dealers are expecting the six-month premium to fall to 4.70 per cent and the one-year premium to ease to 4.75 per cent.