Re Recovers On Profit Sales, Premiums Follow

The spot rupee closed at 47.13 today, 1.5 paise up against Monday's close of 47.1450/1550 after falling to an all-time low of 47.21. Forward premiums closed marginally higher.

The spot rupee opened lower at 47.1750 and slipping to a new all-time low of 47.21 on the back of inter-bank trading. Nationalised banks continued buying in the early part of the trading session, pushing the rupee lower and keeping exporters away from the market.

"The rupee recovered in late afternoon trades from its all-time low as dollar demand stabilised, leading to profit-booking sales by banks and inward remittances by exporters," said a dealer with a new private sector bank. "The demand came primarily from nationalised banks and the rupee fell due to inter-bank play. Very few corporates were seen in the market," he added.

"It is mainly some liquidation of inter-bank dollar positions. Exporters are also bringing in dollars as the rupee is now expected to trade in a range," a dealer said. The latter half of the trading session saw the rupee gain somewhat as the nationalised banks sold dollars but it was not enough to help the rupee to recover fully. "The supplies were in all probability sold into the market at the behest of the Reserve Bank of India (RBI) in order to contain the volatility of the rupee," said a dealer with a foreign bank.

Tomorrow the spot rupee is expected to keep a tight range of 47.12-47.17 with supplies expected from the public sector banks in order to keep the rupee in check. Forward premiums closed marginally higher on the back of a volatile spot, for the second day running. The six-month annualised premium closed at 4.85 per cent while the one-year annualised ended the day at 4.80 per cent.

"Premiums rose in the morning, with the spot rupee plummeting to its new low of 47.21. In the afternoon, as the spot rupee recovered, forward premiums also recovered slightly, to close few basis points higher," said a foreign exchange dealer.

Importers bought continuously in the spot market, increasing the demand and pushing it lower during the day. The latter half of the trading session saw exporters selling for booking profits.