Re Dips A Touch, Forwards Remain Soft

The spot rupee ended the day at 47.1250 against the US dollar, marginally down from Wednesday's close of 47.11, after keeping a tight 5-paise range through the session. The forwards remained soft through the day.

The spot rupee opened at 47.1350 and kept a bid range during the session. "There was demand throughout the day and most of it was satiated by the ample dollar supplies. Banks were doing most of the purchasing and there were good supplies at nearly all levels," said a dealer with a new private sector bank.

Despite the demand and supply matching off, the rupee hit an intra day low of 47.16. "These levels for the rupee became difficult to sustain, but the supplies were unable to push the rupee back to 47.10 levels. There was a negative sentiment in the market after the second lowering in outlook in as many days," said a foreign exchange dealer.

Tomorrow, the spot rupee should keep a range between 47.12 and 47.15, maintaining it's tight run. The Reserve Bank of India's reference rate remains unchanged at Rs 47.14.

The forward premiums ended the day soft after rising to intra day highs due to a weak sentiment in the spot market. The 6 months (annualised) premium ended the day at 4.76 per cent as against 4.77 per cent, while the one year (annualised) ended at 4.85 per cent as against 4.80 per cent on Wednesday.

"Premiums opened soft and went to intra-day highs like 4.83 per cent for the benchmark 6-month (annualised). It, however, ended at 4.76 per cent, falling before close," said a dealer with a foreign bank.

"The market did have a negative sentiment initially but it is basically not factoring in the downgrades. After the finance minister's statement yesterday and the RBI's governor's statement today, the sentiment cooled off," he continued.

Tomorrow the forward premiums should continue to remain soft. It may also come off some. "The downgrades are by far the worst news the market has received in recent times. Given that the premiums did not crash now, it should sustain these levels for a few days," said a dealer with a public sector bank.