Re Swings May Be Mild, Forwards Could Dip

The rupee is expected to rule in the range of 35.70 to 35.75 this week.

Players in the market said there will not be a sharp movement in rates as the supply of dollars in the market was sufficient.

Players in the market viewed with scepticism, the statement made by the finance minister regarding the convertibility of the rupee on capital account. Though the statement had no immediate impact on the market, bankers said the effect may be felt later.

Forward premium are likely to be lower this week and could quote in the region of 9 per cent. The easing of rates is expected to be caused by large forward dollar sales by exporters. Trading could, however, be subdued today on account of half yearly closing of bank accounts.

Last week, the spot dollar rates around Rs 35.72. There was, however, a marginal hardening of the rupee on Tuesday and Wednesday. This was believed to have been the direct fall-out of the RBI governor' statement regarding a further cut in interest rates. As a result, exporters sold sizeable amount of forward dollars, unwinding their positions. The rupee finally settled at 35.72 on Friday last.

The premiums fluctuated between 9.3 and 9.6 per cent in the preceding week. They were particularly lower on Thursday, at 9.3 per cent.

This was the result of large dollar sales, which occurred due to the feeling that the rupee would remain fairly stable till the month- end. Exporters and importers were more comfortable with some open positions over the long-term.

In international markets, the dollar weakened on good sales after the expected interest rate hike on the dollar failed to materialise after the FOMC meeting on September 24. This was followed by a sale of dollars.

It, however, recovered lost ground after it hardened to 1.5180 against the mark and 110.40 against the yen two days later.ont>