Rupee To Remain Ranged, Forwards To Edge Up

The spot rupee is expected to stay in the 47.75-47.85 range to a dollar during the week on the back of allround selling in the market. Forex dealers aver that this range will hold good provided no "event" occurs on Monday, and in that event it may pierce the 48 levels.

Forex dealers have pegged a firm level (a floor of 47.75 and a ceiling of 47.85 to a dollar) for the rupee during the week against the previous week's level of 47.81-47.90.

"The corporates, which have availed of external commercial borrowings and foreign currency non-resident (B) loans, are selling dollars in the market. This coupled with steady dollar inflows from export proceeds and inward remittances are strengthening the Indian unit against the greenback," a forex dealer with a private sector bank said.

Call market rates are expected to tighten due to the advance tax outflows and will result in market players not holding long dollar positions and start selling dollars further, adding to the already swollen supplies.

"Provided no adverse event occurs on Monday, the movement of the rupee in the interbank foreign exchange market will be range bound. The market will be driven solely by political events," said another dealer.

He pointed out that the Reserve Bank of India (RBI) would like to see the rupee, which has been firming up in the last couple of weeks, closer to the 48 mark so that exporters find it attractive to bring in their dollars. In the week gone by, the central bank is reported to have bought dollars worth 200-300 million so as to slowdown the appreciation in the rupee, the dealer added.

Forward premiums are expected to edge up a tad on the back of tight liquidity conditions that is likely to obtain in the interbank money market in the coming week. The six-month annualised forward premium is expected to hover in the 6.15-6.30 per cent range against the previous Friday close of 6.20 per cent while the one-year forward premium will be wedged in the 6-6.15 per cent range compared with the previous close of 6.05 per cent.

The rupee remained firm till Wednesday in the 47.81-83 range during the last week due to steady dollar inflows. But sentiment in the foreign exchange market was marred on Thursday due to the terrorist attack on parliament. The rupee fell by 5 paise to close at the 47.850/865 level. On Friday, the Indian currency recovered by over three paise supported by fresh exporter dollar sales and unwinding of long positions by banks ahead of a long weekend.