Spot Appreciates On Scant Demand, Forwards Slip

The spot rupee ended the day at 47.1050, recovering by 2.5 paise from yesterday's close of 47.13 after a day of no demand and scarce supplies. Forward premiums also came off due to lack of interest.

"The spot rupee opened at 47.11 and kept a narrow range of 47.10-47.1150/12 and stayed there through the day as there were no cash remittances," said a dealer with a new private sector bank.

"As American market was closed today on account of Independence Day (4th July), there was practically no demand," he added.

The supply remained scarce as has been for the entire week until now. "As the demand lessened today, little supplies could not make much of a difference. The rupee, which had been falling for the last two days, remain stable today," said a dealer with a public sector bank.

Tomorrow the spot rupee should keep a larger range of 47.10-47.20. "With the US markets open tomorrow, the spot rupee could fluctuate in a bigger range. The supply should continue to remain scarce as most funds are exiting the market. Despite this, the foreign funds remained net buyers in the earlier part of this week, though by a meager amount," said a dealer with a foreign bank.

Forward premiums closed lower after a day of little activity. The 6-month annualised premium closed the day at 4.7 per cent against 4.85 per cent on Tuesday while the one-year annualised ended the day at 4.7 as against 4.80 per cent on Tuesday.

"The premiums have not seen much activity in the last few days as the spot rupee has been more active and volatile but forwards haven't seen much activity. Since the expected domestic rate cut has not come through, premiums are not being traded as actively," said a foreign exchange dealer.

"Premium curve has been flat for the last few days and is expected to continue for the next few days as premiums could see movement only if there is a bank rate cut," said a dealer with a foreign bank.

Tomorrow premiums should keep a flat range, without changing much. "The 6-month annualised premium should keep a range of 4.70 per cent to 4.75 per cent," he added.