Spot Down A Tad, Forwards Static

Spot rupee fell marginally today to close at a new low of 48.5250/5350. Forward premiums remained almost static despite the fall in government security yields as the market remained volatile.

The rupee opened at 48.5150/5250 and fell sharply to touch the day's low of 48.58/59. However, public sector banks came to the rescue of the currency and supplied dollars which helped the rupee to close stronger.

A dealer with a foreign bank said: "There was genuine corporate demand in the market and it pushed down the currency against the greenback. However, the Reserve Bank of India (RBI) might not have liked the sharp fall in the currency and supplied dollars through public sector banks."

In the forward premium market, the six-month annualised premium remained unchanged at 5.70 per cent. The one-year premium ended the day at 5.48 per cent compared with yesterday's closing of 5.50 per cent.

The rupee is likely to hover around 48.45-48.55 tomorrow. Forex dealers said that there could be high corporate demand even tomorrow, but the apex bank is likely to help the market by supplying dollars through state-run banks.

A dealer said: "There is no doubt that the rupee is slightly overvalued now, but as the sharp fall in the currency may generate speculative pressure, the apex bank will control the fall."

Forward premiums are expected to remain range-bound with a southward bias due to the possibility of a further dip in government paper yields and increase in the US interest rates.

However, the volatile rupee may check the dip in the premiums. Forex dealers said that the six-month annualised premium is expected to hover around 5.65-5.70 cent. The likely range for the one-year premium will be 5.45-5.55 per cent.