Spot, Forward Premiums Droop Amid Insipidity

Spot rupee traded in the 47.96 - 47.98 range on Tuesday against the dollar amid dull trading.

Forward premiums went down marginally as the call money rates eased below the bank rate. The spot rupee opened in the range of 47.96/97, and weakened marginally to close in the range of 46.9750/9850.

A dealer with a private bank said: "Trading continued to be dull and range-bound. There was not much pressure from the demand or supply side." Dealers said State Bank of India was main buyer of the greenback, while the foreign and private sector banks were the main suppliers.

Forward premiums fell marginally on Tuesday tracking the call money rate. The 6-month premium closed at 6.24 per cent as against Monday's close of 6.28 per cent. The one-year premium closed at six per cent, same as Monday's close.

A dealer with a foreign bank said: "Forward premiums rose high yesterday on expectations of a Fed rate cut. However, the expectation was belied on Monday and had no impact on the premiums on Tuesday. Further, as the call rates eased, they came down as well."

Rupee is likely to remain stable and may be traded in the range of 47.95 to 48.05 on Wednesday. A dealer with a private sector bank said: "We expect the Indian unit to be traded around the 48-mark amid thin volumes." State-run banks will hold the dollar firm around 48, if it tends to strengthen, dealers said.

Forward premiums will move in accordance with the Fed decision. Dealers said if the Fed cuts the rate, premiums are likely to move up marginally, but if a rate cut doesn't happen, premiums will soften. A dealer with a foreign bank said: "The rate cut impact is already discounted, and so an actual cut is not likely to impact the market. But if there is no rate cut, there will be correction."