Rupee Steady, Forex Hoard Soars

The rupee ended steady at 46.13 per dollar on last Monday after slipping to an intra-day low of 46.1575.

Earlier, the rupee rose to a high of 46.1125 levels on inflows from foreign institutional investors and exporters.

The week witnessed some routine month-end demand on the rupee which pushed it lower. However, dollar sales from exporters helped the local unit recoup some of its losses.

But as the week progressed, dollar rupee forward premiums crashed owing to acute shortage of greenbacks in the cash market.

The shortage emerged from the clubbing of month-end demand for dollars and the squaring up of open positions by banks.

Cash-spot was ruling around par as against the usual premium of 40-45 basis points. This is because the demand for cash dollars went up as most of the banks wanted to square up their positions in order to prevent future losses arising out of falling premiums.

Banks had entered into sell-buy swaps whereby dollars were sold in the spot market to receive them in the forwards mart.

While banks were left with open dollar receiving positions, a falling forward premiums hit the market with the players incurring losses.

The fall was the steepest in the near term as one-month premiums slipped by 92 basis points from last Friday