Re Tests 49-Mark, Forwards Look Up

The rupee breached the 49-mark against the dollar today on concerns over a war amid low trading level. Forward premiums rose marginally tracking government paper yields.

The currency opened at 48.9850/9950 and went up slightly in the initial hours. The highest deal done was at 48.97/98. Later in the afternoon it dipped to close at around 49.00/01.

A dealer with a private sector bank said: "The volume was low as the border situation continued to cast its shadow over the market. There was no panic but the traders were cautious in taking positions."

Another dealer with a public scoter bank said: "There was dollar inflows on Wednesday as the border situation had improved a bit. But today the condition deteriorated once again and it affected the market sentiment as well as dollar inflows."

In forward premiums, the six-month annualised premium closed at 6.03 percent against yesterday's closing of six cent. The one-year premium ended the day at 5.64 per cent (5.62 per cent).

A dealer with a private sector bank said: "Forward premiums are expected to go down tomorrow along with government paper yields and it started the day likewise. However, the war tension pushed them up."

The rupee is expected to hover around the 49-mark tomorrow. The country treasurer at a foreign bank said: "The movement of rupee against the greenback will largely be influenced by the border situation. However, it will remain stable as the RBI wants it to be like that." Forward premiums are also expected to rule in a thin range.

According to dealers, the six-month annualised premium may hover around 5.95-6.05 per cent, while the one-year premium may rule in the 5.60-5.70 per cent band.