Rupee Ends Inert, Forwards Up A Tad

The rupee ended barely changed today at 49.0175/0275 to a greenback compared with the previous close of 49.0075/0175. Sentiment in the market turned slightly optimistic as a senior US administration official landed in Delhi from Islamabad on a diplomatic initiative to cool off tensions between India and Pakistan. Forward premiums edged up a tad as players chose to square-off their exposures over the weekend.

The rupee, which opened at 49.01/02 to a dollar, was boxed into a narrow range of 49.02-49.03 during the course of the day's trading.

"The rupee was steady throughout the day as fears of a war breaking out between India and Pakistan receded considerably in the wake of global diplomatic efforts. Light corporate demand, which came in towards the close of the trading, prevented the rupee from appreciating further," said a dealer with a private bank.

"Receding war fears led banks to unwind long positions and corporates bought on dips," he said.

Dealers averred that sentiment in the market has improved a bit on the back US deputy secretary of state Richard Armitage's statement in Islamabad that Pakistan would refrain from initiating a conflict. Further war concerns eased after Foreign Minister Jaswant Singh said the country was committed to peace despite being locked in a tense standoff with Pakistan.

Forwards premiums moved up as banks did not want to keep their positions open over the weekend as Indo-Pak standoff continues. The six-month annualised forward premium closed higher at 5.93 per cent against its previous close of 5.88 per cent. The one-year forward premium closed at 5.67 per cent against its previous close of 5.61 per cent.