Rupee Ranged On Exporters $ Supplies; Premiums Up

The rupee remained range-bound against the US dollar today, though it appreciated a bit in the dying hours of trade on the back of dollar supplies from exporters. Forward premiums inched up, tracking higher call money rates.

The local currency opened in the range of 47.16-17 in the morning and remained in the same band almost throughout the day.

However, it went up against the greenback in the afternoon to close the day in the range of 47.14-15. Dealers informed that foreign banks were selling dollars in the market on behalf the exporters.

A dealer with a private sector bank said: "Trading in the forex market continued to remain dull in the absence of market-moving factors, though sentiment remained subdued as the rupee is still overvalued against the dollar."

Another dealer said: "There has not been much importer demand on the back of the industrial slowdown. Moreover, international oil prices are also steady. This has kept the rupee in a tight range against the dollar."

Forward premiums rose as call money rates hardened to touch 7.70 per cent. The six-month forward premium went up to 4.80 per cent as compared with Friday's close of 4.71 percent. The one-year premium increased to 4.77 per cent as against Friday's close of 4.70 per cent.

A dealer said: "Call money rates were high today. Moreover, we expect the Reserve Bank of India (RBI) to conduct an auction of at least Rs 3,000 crore during the week. Premiums were up on these two concerns."

The rupee is likely to be traded in the narrow range of 47.13 to 47.17 tomorrow. A dealer with a foreign bank said: "We do not expect much changes in the scene tomorrow and, hence, the rupee should trade in the same range as today."

Forward premiums may move up further as call money rates are expected to remain high. Dealers expect the six-month premium to be in the range of 4.72 to 4.85 per cent and the one-year premium in the range of 4.70 per cent to 4.80 per cent.