Soft Overnights Clip Forwards, Spot Narrowly Poised

The spot rupee was traded in a narrow range of 47.1350-47.1550 today against yesterday's 47.13-47.1425 amidst very low volume of trading. Forward premiums declined further on the back of very easy call rates that remained below the refinance rate of seven per cent.

The spot rupee opened around 47.1375-47.14 in the morning. The Indian currency, however, weakened a bit from that level to touch the 47.1550 mark during the day on the back of the month end demand. However, it resurrected again to close at 47.1350. Public sector banks were the main buyers while the foreign banks and the private sector banks were the chief suppliers of it, forex dealers said.

A dealer with a foreign bank said, "Trading in the spot rupee market was very thin and the rupee remained in a narrow range. It was only the month end demand that weakened the Indian currency during the initial hours of trading."

The Reserve Bank of India (RBI) reference rate of the dollar stands at 47.15 today against 47.14 yesterday.

Forward premiums have come up a bit today. The six-month premium closed at 4.54 per cent compared with 4.55 per cent yesterday while the one-year premium closed at 4.68 per cent against 4.70 per cent yesterday.

A dealer with a foreign bank said, "As call rates continued to remain soft despite the auction outflow, forward premiums eased a bit."

Spot rupee is likely to remain range-bound in a band of 47.11-47.16 per cent in the coming week.

A dealer said, "The condition in the forex market is likely to remain unchanged in the coming week as we do not expect any positive or negative news to come."

Dealers are expecting forward premiums to remain range-bound at the current levels. The treasury head of a private sector bank said, "Call rates are likely to remain soft and stable around the current level and so forward premiums."