No cause for worry

The spot rupee is expected to hover in the range of 43.50-60 to a dollar during the week. Foreign exchange dealers said, "Irrespective of oil prices globally, the exchange rate continues to remain stable on the back of dollar inflows and strengthening of dollar overseas."

Oil prices continue to be high but dealers shrug it off as a problem for the regulator given the comfortable foreign exchange reserves.

According to them, even if oil companies barge in the market almost every day to buy spot dollars for payments, that will not alter the exchange rate.

They also added that it is not only portfolio investments that is supporting the exchange rate but also supply of dollars in the form of ADR/GDR, external commercial borrowings and foreign currency convertible bonds.

Forwards premiums

Forward premiums are expected to rule steady. With an expected technical correction in the euro and pound, rupee might strengthen.

This might prompt exporters and corporate , sitting on the fences to realise their proceeds. Thus, dollar supply may subdue forward premiums.

The demand for forward dollars may, however, arise from inter-bank players who expect a dollar strengthening after the technical correction is over.

Recap: Both the spot rupee and the premiums on forwards remained flat. In the spot market, demand for oil payments got balanced out by the supply of dollars from corporate proceeds and export sales.

With every dip in the value of spot rupee, exporters preferred to realise their proceeds.