No Major Shift Seen In Re, Forwards

The rupee is likely to rule in the range of Rs 35.70 to 35.80 against the dollar this week, while the six-month annualised forward premiums may move between 7.5 per cent and 8.5 per cent.

According to one dealer, near-term buying is likely to gain momentum because importers will go for near-term cover. This will cause forward premiums for December and January to rise. A fallout of this would be the pressure exerted on the spot dollar, prompting it to move up, particularly during the latter half of the week. However, one dealer felt that this week is likely to see exporters going in for cover causing the premiums to rule between 7.5 per cent and 8 per cent.

A cross-section of dealers expect little movement in premiums this week on account of the low call rates. Money being freely available in the domestic markets, bidders may not be willing to pay very high premiums for forward dollars.Last week, premiums did not fall in tandem with call rates because dealers did not know what to expect in the call money markets.

Most of the dealers agree that the dollar will not become cheaper than Rs 35.70, as the Reserve Bank of India (RBI) would then intervene to prevent any undue appreciation of the Indian currency.

The demand and supply positions should also not change radically this week, keeping the rupee ruling in more or less the same band as last week. The past week also saw a fairly bid market with the State Bank of India (SBI) and the RBI purchasing substantial volumes of the greenback.

On Thursday, the central bank is said to have purchased $100 million, while on Friday, the SBI entered the market making dollar purchases throughout the day. This supported the dollar, helping it retain its position in the face of good supplies.