Psb $ Bids Clip Spot, Forwards Idle

The rupee fell marginally today on the back of dollar buying by public sector banks (PSBs), while forward premiums remained steady.

Spot rupee opened at 48.66/67 and strengthened to 48.65/66 levels. The currency dipped later to close at 48.68/69.

A dealer with a foreign bank said: "There was no demand or supply pressure from the corporates. However, as the rupee showed a slight sign of recovery, public sector banks entered the market to stem the rise."

Dealers said the volume of trade was thin in the market. In forward premiums, rates were steady despite the fall in government paper yields. Both the six-month annaualised and one-year premiums remained unchanged at 6.30 per cent and 6.10 per cent, respectively.

The treasury head at a private sector bank said: "Though government paper yields dipped today, it did not have any impact on forward premiums as there was some payment pressure in the market."

The spot rupee will remain stable in the 48.65-48.70 range unless the state-run banks mop up dollars.

A forex dealer at a new private sector bank said: "No big demand for dollars are in the vicinity. But as the rupee is still overvalued against the dollar, which may hurt Indian exporters, the Reserve Bank of India may purchase the greenback through public sector banks. In that case, the currency will weaken."

Forward premiums are expected to remain stable with a downward bias as government security yields may fall further due to the easy liquidity situation.

According to dealers, the six-month annualised premium is likely to hover around 5.28-5.33 per cent, while the one-year premium may rule in the 5.07-5.12 per cent band.