Rupee Up 3 Paise; Premiums Dip On Tight Call Rates

The spot rupee today ended higher by 3 paise at 47.11/12 due to good supplies from unwinding of long dollar-positions by banks. On Monday, the rupee closed at 47.14/15. The premiums closed the day lower due to a tight, range-bound call rates.

The rupee opened the day at 47.1450/1550, which was also the day's low. A dealer with a new private sector bank said, "The demand remained meagre throughout the day with the dollar supplies from regular quarters coming in. This pushed the greenback lower."

"The buying interest continued to remain less with the banks liquidating their long dollar-positions. The carrying cost of these dollars continued to remain high as the call money rates remained high," said another dealer with a private sector bank. Especially, as the carryover cost will also include in the price from tomorrow, banks preferred to liquidate today, he added.

The premiums closed lower today by about 3 paise, especially in medium- and long-term contracts. The six-month annualised premium ended 4.6 per cent compared with 4.75 per cent on Monday, while the one-year annualised premium closed at 4.65 per cent compared with the Monday's close of 4.75 per cent.

A dealer with a foreign bank said, "The premiums are closely tracking the overnight rates, which have been tight for the last few days. This high call rates are pushing the premiums lower and sending signals about liquidity. The next few days could also see some tight liquidity."

A forex dealer said, "The premiums moved primarily on the medium- and long-term contracts closing lower by 3 paise. They should continue to track the call rates and may even drift a little lower." "Today, the premiums softened towards the late afternoon when the overnight rates came off," he added.

The spot rupee is likely to keep a range of 47.09 to 47.13 tomorrow and the premiums are expected to track the call rates and should have a downward bias.